The news that there’s a Paris property tax increase on the way might seem concerning to owners.
Especially as reports are quoting a rise of 62% – but is it as worrying as it seems?
We take a look and find that property tax in Paris remains much lower compared to other cities.
Which tax is increasing?
There are two different property taxes owners should be aware of.
The first tax is the taxe foncière (property tax). This tax is due on any property owned in France, whether it is a primary or secondary residence.
The property tax takes into account the ‘cadastral rent value’ of your apartment. Essentially, this means how much rental income the property would bring in.
This is the tax that is increasing this year.
There is also another tax, known as the taxe d’habitation (residency tax). This tax is now cancelled on primary residences – but is still due for those with second homes.
This applies to a lot of 56Paris clients, and is of specific interest to foreign residents with a second home in Paris.
The residency tax recently went through some changes, including how owners declare their status to the government. It’s something we covered in an earlier blog.
How much is the property tax going up?
This is a combination of a local increase for Paris of 51.9% plus a national increase of 7.1% added on top.
Essentially, this means a total Paris property tax increase of 62.7% over the previous year.
But what are the reasons for the increase? There are a few factors at play.
The most obvious are the same economic issues that are affecting many areas of life. This includes the general rise of living costs, rising energy bills, and the ongoing conflict in Ukraine.
The reports suggest the extra funds will help offset these costs. It’s even estimated the tax rise will bring in some €800 million of new revenue for the government.
It’s also important to note that this is the first increase in the tax since 2011.
Examples of the Paris property tax increase
So how much more will owners pay following the Paris property tax increase?
Here are some basic figures as an example, comparing the tax due in 2022 to this year.
The annual property tax on an apartment of 50 square meters that was €438 last year, would now be €665.
Or for a larger apartment of 75 square meters, an annual 2022 tax of €576 would now be €874.
These are random apartment figures and are a general guide – each property will have many other factors that influence its value, and therefore, the tax due.
Of course, inflation will also have an effect in real terms.
So while it’s a jump, the tax is still modest.
But, Paris remains among the lowest
Finally, it’s worth looking at the Paris property tax increase in context with other cities around the world.
Antoine Levy, Professor of Economics at the University of Berkeley says, “Paris is one of the places where the property tax, relative to the value of a property, is the lowest.
“In the rest of France, the property tax represents on average 0.5% of the real value of housing. But in Paris, it’s between 0.1% and 0.2%.
“Looking internationally, the average property tax paid is around 1% of the value of the property. Paris rates are still a fraction of that.”
Putting everything into consideration, it’s not very worrying news for property owners in Paris.
56Paris is here to help
If you have concerns or queries about the Paris property tax increase, we would be happy to help you. Feel free to get in touch with our team of property experts.
All information given in this blog is correct at the time of writing and is a guide only. At 56Paris, we always recommend consulting an accountant or tax professional for personalized advice on your own assets and tax situation.