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 equipment. |
| 🧑💼 Who is concerned? | Paid by the person occupying the property on January 1st, whether they are the owner or tenant, regardless of how long they stay during the year. |
| 📊 Tax calculation | Based on the cadastral rental value of the property, influenced by size, location, and the household’s income and composition. |
| 🔄 Tax reform | Gradual elimination for Main residences since 2023, but not for secondary residences or seasonal furnished rentals. |
| 🏖️ Tax on secondary residences | Still applicable to secondary residences. Certain municipalities may impose an additional levy in high-demand areas. |
| 🛋️ Cases of furnished rentals | Applies to seasonal furnished rentals. Owners must pay unless they can prove ongoing rental throughout the year. |
| 💬 Owner’s responsibility | Owners are generally responsible, though proving an annual rental to third parties can exempt them, requiring them to pay the Business Property Contribution (CFE). |
| ❓ Possible exemptions | Owners can be exempted 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 is for residential use. |
| 🆘 In case of dispute | Contact the tax authorities with proof such as rental contracts or payment receipts to contest unjustified tax claims. |
Seasonal furnished rentals are 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 on who is obliged to 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 benefit residents directly. For example, this tax helps finance green space maintenance, roads, and the management of municipal equipment like schools and sports facilities. Additionally, it ensures crucial infrastructure such as public lighting and waste collection, services enjoyed by all residents.
Who is concerned by the housing tax?
The housing tax is owed by the person occupying the property on January 1st of the assessment year. This can be the owner or the tenant, depending on the situation. This rule applies regardless of how long the person has occupied the property during the year. Therefore, even if you move or start renting after January 1st, the person occupying the property at that date is responsible for the payment of the tax for the entire year. The tax does not operate on a prorated basis, meaning it cannot be divided proportionally to the duration of occupation.
Tax calculation
The amount of the housing tax depends on several factors. The primary is the cadastral rental value of the property, which is the theoretical value the property could generate if rented. This value is calculated based on various criteria such as the size of the dwelling, the number of rooms, amenities, and geographic location. The larger and more desirable the area, the higher the rental value will be.
Other factors also influence the calculation, such as household income and its composition. Families with children or dependents may benefit from tax allowances, reducing the payable amount.
Reform of the housing tax on primary residences
Since the 2023 reform, the housing tax has been progressively phased out for Main residences. This reform aims to reduce the financial burden for households occupying their primary dwelling. Consequently, many taxpayers no longer pay this tax for their main residence. However, this exemption does not apply to second homes or seasonal furnished rentals.
Housing tax and secondary residences
The housing tax remains applicable to second homes. These properties, not used as the owner’s primary residence, are still subject to this tax. Moreover, some municipalities may impose an surtax on the housing tax for second homes located in “tight” zones, where housing supply is less than demand.
Special case of seasonal furnished rentals
Seasonal furnished rentals are also subject to the housing tax. The property owner generally must pay the tax even if they do not occupy the property on January 1. However, if the owner can prove that the property is rented continuously throughout the year, they might be exempt from this tax. In such cases, they will still be liable for the Business Property Contribution (CFE), a tax payable 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 seasonal furnished rentals is often confusing for owners. It is crucial to understand the applicable rules to avoid misunderstandings with the tax authorities.
Owner’s responsibility
In a seasonal rental, the owner is typically liable 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-term and temporary nature of seasonal rentals means the owner often remains the one liable for this tax.
This is because the owner can access the property at any time of the year. Even if the property is rented most of the time, simply having the ability 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 intended for seasonal rental and not used by the owner or their close relatives.
In this case, the owner might be exempt from the housing tax but will still be liable for the Business Property Contribution (CFE). The CFE applies to anyone engaging in a business activity, and furnished rental is considered such an activity.
Furnished rentals and enjoyment of the property
French case law is clear: as soon as the owner can be considered as having the enjoyment of the property at any time of the year, they are liable for the housing tax. This even includes vacation periods or times when the owner may decide to use the property for personal purposes. That’s 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. The exemption mainly applies if the property is rented continuously throughout the year without the owner reserving personal use, even briefly. To obtain this exemption, the owner must demonstrate that the property is exclusively dedicated to seasonal rental and that they do not reside there or retain the enjoyment rights.
Necessary documentation for exemption
To qualify for this exemption, the owner must be able to provide proofs showing that the property is genuinely rented continuously. These documents may include:
- Rental agreements proving the property was occupied by tenants throughout the year.
- A management mandate signed with a rental agency or platform like Airbnb, showing that the owner has entrusted full management and cannot stay there.
- Availability calendars indicating the periods when the property was offered for rent, covering all year.
- Payment proofs of rents 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)
Nevertheless, even if the housing tax exemption is granted, the owner will be required to pay the Business Property Contribution (CFE). The CFE applies to anyone engaging in a professional activity, and furnished rental is regarded as such an activity.
The CFE is calculated based on the rental value of the rented property and can vary depending on the income generated by the rental activity. The minimum amount for this contribution was about €227 in 2022 but can be higher depending on the property’s location and turnover.
Other special 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 primary residence. If the owner uses the property for personal purposes part of the year, they will not benefit from this exemption and will have to 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 apply in very different situations. The housing tax is owed by the occupants of a dwelling on January 1st of the year, whether they are owners or tenants. It mainly applies to Main residences and secondary residences.
In contrast, the CFE is a specific tax on persons engaging in a professional activity. In furnished rental cases, 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 personal residence use.
Application conditions
The housing tax applies to any habitable dwelling, whether it is a main residence, secondary residence, or seasonal rental, if the owner retains the enjoyment of the property at any point during the year. In other words, even if the property is rented part of the year, the simple ability of the owner to 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 solely for furnished rental and does not retain personal enjoyment. If the property is rented continuously without the owner staying there, they are then exempt from the housing tax but must pay the CFE.
Calculation method
The housing tax is calculated based on the cadastral rental value of the property, accounting for elements 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, however, is calculated on the rental value of the premises used for the professional activity, meaning the furnished rental. It is also influenced by the turnover generated by the rental activity. The rental value of the property from two years prior (N-2) is generally used as the basis for calculation.
Exemptions and obligations
For the housing tax, if the owner can demonstrate that the property is rented throughout the year without their personal use, they may be exempt from this tax. However, in this case, they will be liable for the CFE. In summary, these two taxes are mutually exclusive: if the owner pays the CFE, they are generally exempt from the housing tax, and vice versa.
Secondary residences and tourist furnished accommodations
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 is exclusively rented out, the CFE will apply instead of the housing tax, provided the property is not the owner’s personal residence.
What to do in case of dispute with the tax administration?
Contact the tax office
If you receive a complaint regarding the housing tax that you believe is 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 claimed amount.
The owner must clearly explain their situation and provide all relevant information justifying exemption from the housing tax, especially if the property is rented as seasonal rental without them retaining personal enjoyment.
Provide supporting documents
To support your request, it is crucial to present solid proofs demonstrating that the property is rented continuously and that you have not stayed there or retained the right to use it personally. Among the documents to provide, you might 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.
- Availability calendars detailing the periods during which the property was rented, covering all periods of the year.
- Payment proofs of rent or bank statements showing transaction related to rentals.
These documents are essential to prove that you lacked enjoyment 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 progress of your claim. The tax office may ask for additional information or conduct a more in-depth investigation of the property management. In case of prolonged dispute or an unfavorable decision, you can appeal this decision before the administrative courts.
Seek 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 advisor. These professionals can help you present a solid case, better understand your rights, and avoid mistakes in your procedures.
Legal recourse before administrative courts
If your exemption or reduction request for the housing tax is rejected by the tax authorities, you can consider an appeal before the administrative court. This process may take longer but allows you to defend your rights against an unjust decision. Again, having a tax expert by your side can be advantageous 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 enjoyment rights. However, solutions such as renting it out all year can help you avoid this tax, in exchange for paying the CFE.
