In summary
| 🌍 Section | 📜 Details |
|---|---|
| 🏠 What is the housing tax? | An annual local tax benefiting local communities, financing public services such as road maintenance and municipal facilities. |
| 🧑💼 Who is concerned? | Payable by the person occupying the property on January 1st, whether the owner or the tenant, regardless of the duration of their stay during the year. |
| 📊 Calculation of the tax | Based on the cadastral rental value of the property, influenced by size, location, and the income and composition of the household. |
| 🔄 Reform of the tax | Gradual elimination for Main residences since 2023, but not for secondary residences or seasonal furnished rentals. |
| 🏖️ Tax on secondary residences | Always applicable to secondary residences. Some municipalities may impose an additional levy in areas with high demand. |
| 🛋️ Cases of furnished rentals | Applies to seasonal furnished rentals. Owners must pay unless they prove continuous rental throughout the year. |
| 💬 Owner’s responsibility | Owners are generally responsible, although proving annual rental to third parties may exempt them, requiring them to pay the CFE. |
| ❓ Possible exemptions | Owners may be exempt from the tax if they demonstrate they have not personally used the property and it is rented continuously. |
| 🤔 CFE vs. Housing tax | The CFE applies to professional rental activities; different from housing tax, which is for residential use. |
| 🆘 In case of dispute | Contact the tax authorities with evidence such as rental contracts or proof of payments to contest unfair tax claims. |
Seasonal furnished rental is a popular solution to monetize a secondary residence, but it is important to understand the tax implications, especially regarding the housing tax. Here is a guide to know who must pay it.
What is the housing tax?
A local tax serving communities
The housing tax is a local tax levied annually for the benefit of local authorities. It is essential for funding local public services that directly benefit residents. For example, this tax helps finance green space maintenance, roads, and the management of municipal facilities such as schools and sports facilities. Moreover, it helps ensure essential infrastructure like public lighting or waste collection, services enjoyed by all residents.
Who is affected by the housing tax?
The housing tax is payable by the person who occupies the property on January 1st of the taxation year. This could be the owner or the tenant, depending on the situation. This rule applies regardless of the duration of occupancy during the year. Thus, even if you move or start renting after January 1st, the person occupying the property on that date is responsible for the full year’s payment. Therefore, the tax does not operate based on prorata temporis, meaning it cannot be divided proportionally to the occupancy period.
Calculation of the housing tax
The amount of the housing tax is based on several factors. The first is the cadastral rental value of the property—its theoretical rental value if it were rented. This value is calculated based on various criteria such as the size of the property, the number of rooms, amenities, and geographical location. The larger and more desirable the area, the higher its rental value will be.
Other elements include the household income and household composition. Families with children or dependents may benefit from tax deductions on the housing tax, reducing the amount payable.
Reform of the housing tax on main residences
Since the 2023 reform, the housing tax has been gradually phased out for Main residences. This reform aims to lighten the fiscal burden on households occupying their home as their primary residence. Consequently, many taxpayers no longer pay this tax on their main accommodation. However, this abolition does not apply to second homes nor seasonal furnished rentals.
Housing tax and second homes
The housing tax remains in effect for second homes. These properties, not used as the owner’s primary residence, are still subject to this tax. Additionally, some municipalities may impose a additional surcharge on the housing tax for second homes located in so-called “tight” zones, where housing supply is less than demand.
Specific case of seasonal furnished rentals
Seasonal furnished rentals are also subject to the housing tax. The owner of such a property must generally pay the tax, even if they do not occupy the property on January 1st. However, if the owner can prove that the property is rented continuously throughout the year, they could be exempt from this tax. In such cases, they would still be liable for the Business Property Contribution (CFE), a tax payable by owners engaged in professional rental activity.
Who is responsible for paying the housing tax for a seasonal furnished rental?
The question of the housing tax for a seasonal furnished rental often causes confusion among owners. It is important to understand the applicable rules to avoid misunderstandings with the tax authorities.
The owner’s responsibility
In a seasonal rental, the owner is generally liable for the housing tax, even if they do not occupy the property on January 1st. Unlike a long-term rental, where the tenant is responsible for paying the tax, the short and temporary nature of seasonal rentals means the owner often remains the payer.
This is because the owner can use the property at any time of the year. Even if the property is rented most of the time, the simple fact that the owner can stay there for a few days or weeks justifies their obligation to pay the housing tax.
Possible exemption cases
However, there are situations where the owner can be exempt from the housing tax. To do so, they must prove that the property is rented continuously throughout the year, without reserving personal use. This means the property must be exclusively intended for seasonal rental and not used by the owner or their relatives.
In such cases, the owner can be exempt from the housing tax but will be subject to the Business Property Contribution (CFE). The CFE is a local tax applicable to anyone conducting a professional activity, including furnished rental. Its amount is calculated based on the rental value of the property and the income generated by this activity.
Furnished rentals and property enjoyment
French case law clearly states that: when the owner can be considered to have the enjoyment of the property at any time of the year, they are liable for the housing tax. This includes periods of vacation or times when the owner may choose to use the property for personal purposes. That is why, in many cases, owners of second residences intended for seasonal rental must pay the housing tax.
Are there exemptions for owners?
Exemption under specific conditions
It is indeed possible for a owner to benefit from an exemption from the housing tax, but this depends on certain strict conditions. Exemption mainly applies if the property is rented continuously throughout the year, without the owner reserving personal use, even for a short period. To qualify for this exemption, the owner must demonstrate that the property is exclusively dedicated to seasonal rental, and that they do not reside there or retain enjoyment rights.
Necessary proof for exemption
To benefit from this exemption, the owner must be able to provide supporting documents demonstrating that the property is indeed rented full-time. These documents can include:
- Rental contracts proving the property is occupied by tenants throughout the year.
- A management mandate signed with a rental agency or platform like Airbnb, demonstrating that the owner has entrusted full management and cannot stay there.
- Availability calendars showing that the property has been offered for rent without interruption, with bookings covering the entire year.
- Proofs of payment of rent or bank statements showing transactions related to rentals.
If these conditions are met, the owner can avoid paying the housing tax.
Obligation to pay the Business Property Contribution (CFE)
However, even if the housing tax exemption is granted, the owner must still pay the Business Property Contribution (CFE). The CFE applies to anyone engaged in a professional activity, and furnished rental is considered such an activity.
The CFE is calculated based on the rental value of the rented property and can vary according to the income generated by the rental activity. The minimum amount of this contribution was around €227 in 2022 but may be higher depending on the property’s location and turnover.
Other particular cases
In some cases, if the property is classified as a tourist furnished accommodation, the owner may also be exempt from the housing tax, provided it is not their primary residence. If the owner uses the property personally for part of the year, they cannot benefit from this exemption and must pay the housing tax.
What is the difference between the housing tax and the CFE?
Nature of the taxes
The housing tax and the Business Property Contribution (CFE) are two local taxes but are applied in very different situations. Housing tax is payable by occupants of a property on January 1st of the taxation year, whether owners or tenants. It mainly concerns Main residences and second homes.
In contrast, the CFE is a tax specific to individuals engaged in professional activity. For furnished rentals, it applies if the property is used exclusively for a non-professional furnished rental activity. The CFE is thus linked to a commercial or professional activity, unlike the housing tax, which concerns the use of a property for personal residence.
Application conditions
The housing tax applies to any habitable dwelling—whether a main residence, a secondary residence, or a seasonal rental—if the owner retains enjoyment of the property at any time during the year. In other words, even if the property is rented part of the year, the mere fact that the owner can use it for personal purposes makes them liable for the housing tax.
The CFE, on the other hand, applies when the owner uses the property exclusively for furnished rental and does not keep personal enjoyment rights. If the property is rented continuously without the owner being able to stay there, they are exempt from the housing tax but must pay the CFE.
Calculation method
The housing tax is calculated based on the rental value of the property, considering elements such as size, comfort, and location. The amount can also be adjusted based on household income and family composition, with possible discounts for families with children or dependents.
The CFE, however, is calculated based on the rental value of the premises used for the professional activity—namely the furnished rental. It is also affected by the turnover generated by the rental activity. The rental value from two years prior (N-2) is typically used as the basis for calculation.
Exemption and obligation
In the case of the housing tax, if the owner can prove that the property is rented all year round without personal use, they can be exempt. However, in this situation, the owner must pay the CFE. In summary, these two taxes are mutually exclusive: if the owner must pay the CFE, they are generally exempt from the housing tax, and vice versa.
Secondary residences and tourist rentals
For second residences used as seasonal rentals, the housing tax is due if the owner personally uses the property part of the year. However, if the property is classified as a tourist furnished accommodation and is solely rented out, the CFE will apply instead of the housing tax, provided it is not the owner’s primary residence.
What to do in case of dispute with the tax authorities?
Contact the tax service
If you receive a claim for the housing tax that you consider unjustified, the first step is to contact the tax service for businesses or individuals (according to your situation). It is important to do so promptly to avoid penalties or additional surcharges on the claimed amount.
The owner must clearly explain their situation and provide all relevant information justifying the exemption from the housing tax, especially if the property is rented as seasonal rental without personal enjoyment.
Provide supporting documents
To support your request, it is crucial to submit solid supporting documents demonstrating that the property is rented continuously and that you have not stayed there or kept the right to use it personally. These documents may include:
- Rental contracts proving the property was occupied by tenants throughout the year.
- A management mandate signed with a rental agency or platform like Airbnb, showing that you entrusted full management and could not stay there.
- Reservation calendars detailing the periods during which the property was rented, covering all parts of the year.
- Proofs of payment of rent or bank statements showing transactions related to rentals.
These documents are essential to prove that you did not have enjoyment of the property during the year and that the housing tax should not apply.
Follow-up on the claim
After submitting your request, it is important to track the progress of your claim. The tax office may request additional information or conduct a more thorough investigation of the management of the property. In case of prolonged dispute or unfavorable decision, it is possible to appeal the decision before the administrative courts.
Consult a tax expert
In complex situations or if communication with the tax administration does not lead to a satisfactory resolution, it may be wise to consult a chartered accountant or a tax counselor. These professionals can help you present a solid case, better understand your rights, and avoid mistakes in your procedures.
Appeal to administrative courts
If your request for exemption or reduction of the housing tax is rejected by the tax authorities, you can consider appealing before the administrative court. This process may take longer, but it allows you to defend your rights against an unfair decision. Again, having a tax expert by your side can be an asset in managing this dispute.
In summary, the housing tax for a seasonal furnished rental must be paid by the owner if the property is occupied or if they retain the enjoyment rights. However, solutions such as renting out the property year-round can help you avoid this tax, in exchange for paying the CFE.
