If you own a property in France and live there full time or part time, you are subject to the two separate property taxes on Paris apartments : a residence tax (taxe d’habitation) and a property ownership tax (taxe foncière). They are assessed and paid annually, although you can choose to pay them monthly.
The method of calculation is complex and the amount payable varies among different local authorities. However, as a very rough rule of thumb, most people in Paris pay annually between 0.1% and 0.3% of the property’s value for the ownership tax. The residence tax is roughly the same amount again.
The amount payable in property taxes is not always listed in the sales details. If it isn’t, ask the seller or the real estate agent for a copy of the most recent tax demands (avis d’imposition).
Property ownership tax – taxe foncière
As the owner, you pay the property ownership tax annually, whether you live in the property or not. It is payable by the person that owned the property on January 1st.
In Paris, this tax goes towards the funding of the arrondissement (district) your property is in and the City of Paris.
The ownership tax is calculated by assessing the notional rental value of the property (valeur locative brute). This depends on its size, condition and location. These notional rental values have not been updated for decades in France, so may bear little relation to current rental values.
This value is then discounted by 50% to allow for running costs, such as maintenance, repairs and insurance.
A percentage rate is applied to the discounted notional rental value, which depends on the income your arrondissement needs to raise.
Exemptions may be granted for certain categories of property owners with low incomes. Apart from those exceptions, the amount of tax you pay is not related to your income, so it does not increase the higher your income is.
Residence tax – taxe d’habitation
The residence tax is imposed annually on the person who occupies the property in which they were resident on January 1st. If this is your second home, you are liable for the tax even if you weren’t in residence on January 1st, provided the property is furnished and habitable.
If you rent the property on an annual basis, your tenant pays the tax.
Like the ownership tax, the assessment is based on the notional rent you could get for the property. A formula is then applied to this value, which depends on the amount of money your local council needs to raise. This gives the percentage rate of tax payable.
Exemptions or reductions may be granted for certain categories of people with low incomes, provided the property is their principal residence. Apart from these exceptions, as for the taxe foncière, the amount of tax you pay is not related to your level of income.
In addition, the City of Paris has recently voted to apply an increase of 20% to the taxe d’habitation payable on furnished apartments that are not used as a principal residence. This follows the French government’s policy to free up the rentals market in cities where demand for apartments greatly exceeds supply. The theory is that owners will be encouraged to rent out empty apartments long term rather than pay the extra amount.
Despite this development, the total amount you can expect to pay would normally be significantly less than in certain countries such as the U.S., for example.
When you buy a property, the occupant on January 1st is liable to pay the tax for the whole year.
How much will I pay in property taxes?
The amount you will pay for both taxes depends on which arrondissement your apartment is in and on its size and condition. But you will certainly pay more for an upscale apartment in a central arrondissement than for a studio in an outer one.
It is possible that the notional rental values on which the property taxes are based will be updated, but currently the maximum you are likely to pay for both taxes combined would add up to a few thousand euros per year.
When do I pay property taxes?
The demand for the ownership tax (avis d’impôt taxes foncières) is sent out by your local tax authority in the third quarter of the year. The deadline for payment of the full amount is normally a month or so later. You can also opt to pay in monthly installments.
The residence tax demand (avis d’impôt taxe d’habitation) is sent out separately towards the end of the year, again with a deadline for payment of the amount in full or by monthly installments. If you have a television, the demand includes the TV license fee (redevance audiovisuelle), €136 for 2015, which is payable in addition to the residence tax.