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What is taxe d’habitation and do I have to pay it?

PUBLISHED: 15:30 01 February 2017 | UPDATED: 15:30 01 February 2017

What is taxe d habitation? © Pierre Olivier Clement Mantion/Thinkstockphotos

What is taxe d habitation? © Pierre Olivier Clement Mantion/Thinkstockphotos

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Taxe d’habitation is a residence tax homeowners have to pay in France. Find out what it is, how it is calculated and who has to pay it

What is taxe d’habitation?

The taxe d’habitation is the occupier’s rates, roughly equivalent to council tax in the UK. The funds collected are split between the commune and the group of communes that the commune belongs to. TV licence fees are recovered at the same time as the taxe d’habitation, on the same demand. It should be noted that if you have more than one property in France, you will only pay the TV licence once, even if you have a TV in both properties.

Who pays taxe d’habitation?

This is due by the person residing in the property as at 1 January of the year of charge, whether this is a tenant (paying or otherwise) or the owner.

If the property is rented out for short-term holiday lets or is used as a holiday home only, the owner will normally remain liable to this charge. In years of purchase or sale of a property, the taxe d’habitation is usually payable by the vendor.

How is my taxe d’habitation rate calculated?

Similar to the taxe foncière, the tax is based on the cadastral ‘rental’ value of the property. This value is reduced by certain abatements when the property concerned is the main residence of the taxpayer. Rates are set at commune level so vary depending on where the property is situated. Taxe d’habitation demands are normally sent out in August/September, and are payable in October/November. It is possible to choose to pay the tax due in monthly instalments.

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Who is exempt from taxe d’habitation?

People who are resident in France may be exempt from paying the taxe d’habitation due in relation to their main residence in any of the following situations:

1. They are in receipt of any of these state benefits: allocation supplémentaire d’invalidité (supplementary disability benefit); allocation de solidarité aux personnes agées (solidarity allowance for the elderly); allocation aux adultes handicaps (disabled adults’ allowance) and their income falls below certain thresholds;

2. They are over 60 years old and not liable to French wealth tax and their income falls below certain thresholds;

3. Widows and widowers of any age, who are not liable to French wealth tax and their income falls below certain thresholds;

4. They are handicapped or infirm and unable to support themselves through work and their income falls below certain thresholds.

There may be other exemptions or reductions that apply, depending on the commune and what resolutions have been passed (for instance the commune can resolve to exempt meublés de tourisme in areas which are classified as zones rurales de revitalisation). You should speak to your local tax office to obtain further details.

Who receives partial relief from taxe d’habitation?

When the above does not apply, the taxe d’habitation can still be reduced for those on low incomes, in relation to their main residence only. The reduction is calculated as the fraction of the taxe d’habitation charge which exceeds 3.44% of the taxpayer’s income (the RFR less an abatement which varies depending on the number of family shares).

For a married couple with no dependants, two family shares and income under a threshold of €35,658, their RFR would be reduced by an abatement of €8,612. The resulting figure would then be multiplied by 3.44% and any part of the taxe d’habitation charge that was in excess of this 3.44% figure would be cancelled.

The above should be carried out automatically by the French tax office, but if it has not been, you can request that they apply this.

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What are the thresholds?

The income threshold is reviewed by reference to the revenu fiscal de reference (RFR) of the household (net income as shown on the annual French income tax demand) and the threshold varies depending on the number of family shares of the household. For a single person with one family share, the threshold is €10,697 (2015 income, for the 2016 taxe foncière/taxe d’habitation). This is increased by €2,853 for each additional half share, which means that a married couple with no dependants who benefit from two family shares would need to have an RFR of less than €16,409 (2015 income, for the 2016 taxe foncière/taxe d’habitation) to benefit from the exoneration.

Increase in taxe d’habitation for second homes

In a bid to plug the budget deficit in France, the government announced in early 2015 that owners of second homes in areas of France where housing is in short supply could face a 20% increase in their taxe d’habitation. A total of 1,151 communes located within 28 conurbations were identified as ‘zones tendues’, but the decision whether to implement the increase was left up to individual préfectures. Many of them chose not to, including Nice and Cannes. In Paris the city council have voted to increase the taxe d’habitation due on unoccupied second homes by 60%.

Written by Kate Brehaut, owner of La Belle Vie (Guernsey) Limited

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