Tax in France

There are different taxes when buying and renting property in France so I have listed the main ones When owning a property.

• Taxe fonciere (property tax) is similar to rates and is paid whether you live in the property or not and is paid by the owner. It is split between tax for the building and tax for the land and varies greatly depending on the location. New property is exempt from property tax for the first two years.
  
  
• Taxe d'habitation (residential tax) is a tax payable by the person living in a property on January 1st of each year whether they are the owner or tenant. Therefore if you own and live in a property you pay both fonciere and d'habitation tax.
  
  
• Taxe assimilee (sundry tax) is a tax only paid in certain areas, particularly popular holiday resorts as the local authorities must spend more on amenities and upkeep.
  
  
• Taxe professionelle (professional tax) is paid if you want to use your property to work from home.
  
  
• Impot sur la fortune (wealth tax) does not apply to most first time buyers in France as a couple's annual income has to exceed €720,000.
  

When selling or disposing of a property

Impot sur les plus~values (capital gains tax) is payable on the profit you make when you sell your property in France. So long as the value is more than €15,000 (i.e. not a caravan), you must pay capital gains of 16.5%. Once you have owned the property for 5 years, it starts reducing at 10% of the 16.5% every year, so that after 15 years in total your capital gains liability is zero.

Droits de succession (inheritance tax) is payable on the estate of a deceased person. In France the surviving spouse has an allowance of €76,000 and surviving children €46,000 and after that it is a sliding scale.

Inheritance tax calculations are extremely complicated and should be discussed with a lawyer who knows French law, however two pieces of advice before you complete on your French property are, firstly decide how you want to dispose of your property in the event of one death and secondly make out a will in France.

When renting out your property

Revenue fonciere (rental income tax) is payable by everybody, resident or non resident on rental income received from a French property.

If the amount of rent you receive in a year is less than €76,300 you qualify for a 72% tax deduction and the balance is taxed at the standard rate of 25%. You must also declare your rental income on your UK tax return but you will not pay twice under the Dual Tax Treaties in Europe.

There may be a small bill or refund depending on the difference between what you paid in France and what you would have paid in the UK, so it is worth consulting the Inland Revenue before completion of your property.

General tax

TVA ( VAT) is payable on most things in France and the current rate is 19.6%.