In summary
| 🌍 Section | 📜 Details |
|---|---|
| 🏠 What is the housing tax? | An annual local tax benefiting local communities, funding public services such as road maintenance and municipal facilities. |
| 🧑💼 Who is affected? | Paid by the occupant of the dwelling on January 1st, whether the owner or the tenant, regardless of the duration of their stay during the year. |
| 📊 Tax calculation | Based on the cadastral rental value of the property, influenced by size, location, and household income and composition. |
| 🔄 Tax reform | Gradual elimination for <strong primary residences since 2023, but not for secondary residences or seasonal furnished rentals. |
| 🏖️ Tax on secondary residences | Still applicable to secondary residences. Some municipalities may impose an additional levy in high-demand areas. |
| 🛋️ Case of seasonal 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, though proving an annual rental to third parties may exempt them, requiring them to pay the Business Property Contribution (CFE). |
| ❓ Possible exemptions | Owners may be exempt from the tax if they prove they did not personally use the property and it is rented continuously. |
| 🤔 CFE vs. Housing Tax | The CFE applies to professional rental activities; distinct from the housing tax, which pertains to residential use. |
| 🆘 In case of dispute | Contact tax authorities with evidence such as rental contracts or proof of payments to contest unfair tax claims. |
Seasonal furnished rental is a popular way 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 is responsible for paying 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 financing local public services that benefit residents directly. For example, this tax helps fund green space maintenance, roads, and equipment such as schools and sports facilities. Additionally, it ensures 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 occupying the property on January 1st of the tax year. This can be the owner or the tenant, depending on the situation. This rule applies regardless of the duration of occupancy during the year. Therefore, even if you move or start renting after January 1st, the occupant at that date is responsible for paying the tax for the entire year. The tax does not operate on a prorated basis, meaning it cannot be divided proportionally to the occupancy period.
Tax calculation
The amount of the housing tax is based on several factors. The first is the cadastral rental value of the property, representing the theoretical value it could generate if rented. This value depends on various criteria such as the size of the dwelling, the number of rooms, amenities, and geographic location. The larger the property and the more sought-after the location, the higher its rental value.
Other factors include household income and composition. Families with children or dependents may benefit from tax allowances on the housing tax, reducing the amount payable.
Reform of the housing tax on primary residences
Since the 2023 reform, the housing tax has been progressively abolished for primary residences. This reform aims to lighten the fiscal burden on households occupying their main residence. As a result, many taxpayers no longer pay this tax on their primary dwelling. However, this exemption does not apply to second homes or seasonal furnished rentals.
Housing tax and second homes
The housing tax remains in effect for second homes. These properties, not used as primary residences by the owner, are still subject to this tax. Additionally, some municipalities may apply a additional surcharge on the housing tax for second homes located in “in-demand” areas where housing supply is lower than demand.
Particular case of seasonal furnished rentals
Seasonal furnished rentals are also subject to the housing tax. The owner of a property for seasonal rental must generally pay the tax, even if they do not occupy the property on January 1st. However, if the owner can prove the property is rented continuously throughout the year, they might be exempt from this tax. In such cases, they would still be liable for the Business Property Contribution (CFE), a tax due by owners engaged in professional rental activities.
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 responsible for the housing tax, even if they do not occupy the property on January 1st. Unlike long-term rentals, where the tenant is responsible for the tax, the short and temporary nature of seasonal rentals means the owner often remains the liable party.
This is because the owner can use the property at any time during the year. Even if the property is rented most of the time, the simple possibility for the owner to stay there for a few days or weeks suffices to justify their obligation to pay the housing tax.
Possible exemption cases
However, there are situations where the owner may be exempt from the housing tax. To qualify, they must prove that the property is rented continuously throughout the year without reserving personal use. This means the property must be exclusively used for seasonal rentals and not occupied by the owner or their relatives.
In such cases, the owner can be exempted from the housing tax but will still be liable for the Business Property Contribution (CFE). The CFE is a local tax applied to anyone engaged in a professional activity, including furnished rentals. Its amount is calculated based on the rental value of the property and the income generated by this activity.
Furnished rentals and possession of the property
French jurisprudence is clear: as soon as the owner can be considered to have possession of the property at any time during the year, they are liable for the housing tax. This even includes vacation periods or times when the owner might decide to use the property for personal purposes. That is why, in many cases, owners of second residences intended for seasonal rentals are required to pay the housing tax.
Are there exemptions for owners?
Exemption under specific conditions
It is indeed possible for an owner to benefit from an exemption from the housing tax, but this depends on certain strict conditions. The exemption mainly applies if the property is rented continuously throughout the year without the owner reserving personal use, even briefly. To qualify, the owner must prove that the property is solely dedicated to seasonal rentals and that they do not reside there or retain possession.
Necessary proofs for exemption
To benefit from this exemption, the owner must be able to provide proofs demonstrating that the property is effectively rented continuously. These documents may include:
- Rental agreements showing the property is occupied by tenants year-round.
- A management mandate signed with a rental agency or platform like Airbnb, demonstrating that the owner delegated complete management and could not stay there.
- Availability calendars showing the property was offered for rent without interruption, with reservations covering the entire year.
- Proof of payments such as rent receipts 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 exemption from the housing tax is granted, the owner must still pay the Business Property Contribution (CFE). The CFE applies to anyone engaged in a professional activity, and furnished rentals are considered such an activity.
The CFE is calculated based on the rental value of the property and can vary depending on the income generated. The minimum amount in 2022 was approximately €227, but it may be higher depending on the property’s location and revenue.
Other particular cases
In some cases, if the property is classified as tourist furnished accommodation, the owner may also be exempt from the housing tax, provided it is not their personal residence. If the owner uses the property for personal purposes during 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 taxes
The housing tax and the Business Property Contribution (CFE) are two local taxes, but they apply in distinct situations. The housing tax is payable by occupants of a dwelling on January 1st of the tax year, whether owners or tenants. It mainly concerns primary and secondary residences.
In contrast, the CFE is a specific tax for individuals engaging in a professional activity, and in the case of furnished rentals, it applies if the property is used exclusively for a non-professional furnished rental. The CFE is therefore linked to a commercial or professional activity, unlike the housing tax, which relates to personal housing use.
Application conditions
The housing tax applies to any habitable dwelling, whether a primary residence, secondary residence, or seasonal rental, if the owner retains possession at any time during the year. In other words, even if the property is rented part of the year, the simple ability to use it personally makes the owner responsible for paying the housing tax.
The CFE applies when the owner uses the property solely for furnished rental and does not retain personal possession. If the property is rented continuously without owner access, the owner is exempt from the housing tax but must pay the CFE.
Calculation method
The housing tax is calculated based on the cadastral rental value, considering factors like size, comfort, and location. The amount can also be adjusted based on household income and family composition, with possible allowances for families with children or dependents.
The CFE, on the other hand, is calculated based on the rental value of the premises used for the professional activity, that is, furnished rentals. It is also influenced by the turnover generated. The rental value of the property from two years prior (N-2) is typically used as the basis.
Exemption and obligation
For the housing tax, if the owner can prove the property is rented throughout the year without personal use, they may be exempt. However, they will still be liable for the CFE. In summary, these two taxes are mutually exclusive: if the owner pays the CFE, they are usually exempt from the housing tax, and vice versa.
Secondary residences and tourist rentals
For second residences used as seasonal rentals, the housing tax is payable if the owner uses the property for personal purposes part of the year. However, if the property is classified as tourist furnished accommodation and used solely for rental, the CFE applies instead of the housing tax, provided the property is not the owner’s main residence.
What to do in case of dispute with the tax authorities?
Contact the tax service
If you receive a notice of claim for the housing tax that you consider unjustified, the first step is to contact the tax office for businesses or individuals (depending on your situation). It is important to do so promptly to avoid penalties or additional surcharges on the amount claimed.
The owner must explain their situation clearly and provide all relevant information supporting exemption, such as if the property is rented as a seasonal rental without personal possession.
Providing proof
To support your request, it is essential to present solid evidence demonstrating that the property is rented continuously and that you did not stay there or retain the ability to use it personally. Documents to include may be:
- Rental contracts confirming the property was occupied by tenants year-round.
- A management mandate signed with a rental agency or platform like Airbnb, showing you delegated full management and could not stay there.
- Availability calendars detailing the rental periods, covering the entire year.
- Proof of payments such as rent receipts or bank statements showing transactions related to rentals.
These documents are crucial to demonstrate that you did not have possession of the property during the year and that the housing tax should not apply.
Monitoring the claim
After submitting your request, it is important to follow up on the status of your claim. The tax service may request additional information or conduct a more in-depth investigation into the management of the property. In case of prolonged dispute or unfavorable decision, it is possible to appeal to the administrative courts.
Consulting a tax expert
In complex situations or if communication with the tax authorities does not lead to a satisfactory resolution, it may be wise to consult a chartered accountant or a tax advisor. These professionals can help you present a solid case, better understand your rights, and avoid errors in your procedures.
Appealing to administrative courts
If your exemption or reduction request is denied by the tax authorities, you can consider appealing to the administrative court. This process may be lengthy but 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 conclusion, the housing tax for a seasonal furnished rental must be paid by the owner if the property is occupied or if they retain the right to use it. However, solutions such as renting it out all year can help you avoid this tax, in exchange for paying the CFE.
