In summary
| 🌍 Section | 📜 Details |
|---|---|
| 🏠 What is the housing tax? | An annual local tax benefiting local authorities, funding public services such as road maintenance and municipal facilities. |
| 🧑💼 Who is affected? | Paid by whoever occupies the property on January 1st, whether owner or 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 second homes or seasonal furnished rentals. |
| 🏖️ Tax on second homes | Always applicable to second homes. 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 can prove continuous rental throughout the year. |
| 💬 Owner’s responsibility | Owners are generally responsible, although proving an annual rental to third parties may exempt them, then 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; it is different from the housing tax, which is for residential use. |
| 🆘 In case of dispute | Contact the tax authorities with evidence such as rental agreements or proof of payment to contest unfair tax claims. |
Seasonal furnished rentals are a popular way to monetize a second residence, but it is important to understand the fiscal implications, especially concerning the housing tax. Here is a guide to knowing 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 territorial authorities. It is essential for financing local public services that directly benefit residents. For example, this tax funds the maintenance of green spaces, roads, and the management of municipal facilities such as schools and sports amenities. Additionally, it helps ensure essential infrastructure like public lighting and waste collection, services enjoyed by all residents.
Who is affected by the housing tax?
The housing tax is due by the person who occupies the property on January 1st of the tax year. This can be the owner or the tenant, depending on circumstances. This rule applies regardless of how long the property has been occupied during the year. Therefore, even if you move or start a rental after January 1st, the person occupying the property on 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 occupation period.
Calculation of the housing tax
The amount of the housing tax is based on several factors. The primary one is the cadastral rental value of the property, which is the theoretical value it 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 sought-after the area, the higher its rental value.
Other elements are considered in the calculation, such as household income and composition. Families with children or dependents may benefit from tax rebates on the housing tax, reducing the amount payable.
Reform of the housing tax on principal residences
Since the reform of 2023, the housing tax has been gradually abolished for Main residences. This reform aims to lighten the fiscal burden on households occupying their primary residence. As a result, many taxpayers no longer pay this tax for their main home. However, this abolition does not apply to second homes or seasonal furnished rentals.
Housing tax and second homes
The housing tax remains in force for second homes. 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 “high-demand” zones where housing supply is lower than demand.
Special case of seasonal furnished rentals
Seasonal furnished rentals are also affected by the housing tax. The owner of a property intended for seasonal rental must usually pay the tax, even if not occupying the property on January 1st. However, if the owner can prove that the property is rented continuously throughout the year, they may be exempt from this tax. In this case, they will still be liable for the Business Property Contribution (CFE), a tax payable by owners engaged in professional rental activity.
Who must pay the housing tax for a seasonal furnished rental?
The question of the housing tax for a seasonal furnished rental is often a source of confusion for 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 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 accountable for this tax.
This is because the owner can use the property at any moment during the year. Even if the property is mostly rented out, the mere fact that the owner could stay there for a few days or weeks is enough 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 such cases, the owner can be exempt from the housing tax but will be liable for the Business Property Contribution (CFE). The CFE applies to anyone engaged in a professional activity, including furnished rental. The amount is calculated based on the rental value of the property and the revenues generated.
Furnished rentals and enjoyment of the property
French case law is clear: as soon as the owner can be considered to have enjoyed the property at any time of the year, they are liable for the housing tax. This includes vacation periods or times when the owner may decide to use the property for personal purposes. That’s why many owners of second homes intended for seasonal rental are required to 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 briefly. To qualify for this exemption, the owner must prove that the property is exclusively dedicated to seasonal rental and that they do not reside or retain enjoyment of it.
Required proof for exemption
To benefit from this exemption, the owner must provide solid proof that the property is indeed rented out constantly. These documents can include:
- Rental contracts demonstrating 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 delegated full management and could not stay there.
- Availability calendars showing the property was offered for rent without interruption, with reservations covering the entire year.
- Payment proofs for 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)
However, even if the exemption from the housing tax 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 rentals are considered such.
The CFE is calculated based on the rental value of the rented property and can vary depending on the income generated. The minimum amount was about €227 in 2022 but can be higher depending on the property’s location and turnover.
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 personally for part of the year, they cannot 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 they are applied in very different situations. The housing tax is due by the occupants of a property on January 1st of the year of assessment, whether owners or tenants. It mainly applies to primary and secondary residences.
In contrast, the CFE is a tax specific to persons engaged 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 activity. The CFE is thus linked to a commercial or professional activity, unlike the housing tax, which concerns personal habitation.
Application conditions
The housing tax applies to any habitable property, whether a primary residence, secondary residence, or seasonal rental, if the owner retains the enjoyment of the property at any point in the year. In other words, even if the property is rented part of the year, simply being able to use it for personal purposes makes the owner responsible for paying 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 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 factors such as size, comfort, and location. The amount can also be adjusted based on household income and family composition, with possible rebates for families with children or dependents.
The CFE, by contrast, is calculated based 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 from two years prior (N-2) is generally used as the basis.
Exemption and obligation
In the case of 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 subject to 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 furnished accommodations
For second homes used as seasonal rentals, the housing tax is due 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 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 office for businesses or individuals (depending on your situation). It is important to do so promptly to avoid penalties or additional charges on the claimed amount.
The owner must explain their situation clearly and provide all relevant information justifying 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 present solid evidence proving the property is rented continuously and that you did not stay there or reserve the right to use it personally. These documents may include:
- Rental agreements confirming the property was occupied by tenants throughout the year.
- A management mandate signed with a rental agency or platform like Airbnb, demonstrating that you entrusted full management and could not stay there.
- Reservation calendars showing that the property was offered for rent without interruption, with bookings covering the entire year.
- Payment proofs for rents or bank statements showing related transactions.
These documents are essential to demonstrate that you did not have personal enjoyment of the property during the year and therefore should not be liable for the housing tax.
Follow-up on the claim
After submitting your request, it is important to monitor the progress of your claim. The tax service may request additional information or conduct a more thorough investigation of the management of the property. In case of a prolonged dispute or unfavorable decision, it is possible to appeal this decision before the administrative courts.
Seek a tax expert
In complex situations or if communication with the tax authorities does not lead to a satisfactory resolution, it is advisable to consult a chartered accountant or a tax advisor. These professionals can help you prepare a strong file, better understand your rights, and avoid mistakes in your procedures.
Appeal before administrative courts
If your request for exemption or reduction of the housing tax is rejected by the tax authorities, you can consider an appeal before the administrative tribunal. This process may take longer but allows you to defend your rights against a deemed unfair decision. Again, having a tax expert by your side can be beneficial 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 right to enjoy it. However, solutions such as year-round rental can help you avoid this tax, in exchange for paying the CFE.
