French property costs
Louise Sayers takes a close look at what you will have to pay in terms of taxes and utility charges when you take ownership of your dream property in France
One of the most frequently asked questions posed by those considering purchasing a little bit of France is: “What ongoing costs are there to pay?” It is wise to factor in these costs when you are buying to make sure that you know exactly what is coming. Here is a comprehensive guide to what you can expect to shell out if you become a homeowner in France.
1) Taxe fonci�re
This is an ownership tax, payable by the owner of a property, regardless of whether they use the house themselves or rent it out. It is used to fund local services.
There is no exoneration from taxe fonci�re for second-homeowners. Taxe fonci�re bills are usually sent out in September for payment by mid-November. You can pay by cheque or set up a once-a-year direct debit payment. It is also possible to spread payments over the year by signing up to direct debit payments online but this has to be set up by the end of the previous year e.g. by 31 December 2012 for your 2013 bill.
The general rule on who pays is that whoever owns the property on 1 January in any given year will receive the bill and be responsible for making sure it is paid. If you buy a house halfway through the year, it is customary for you to pay your pro rata share of the year and this is often worked out by the notaire on the day of completion based on the previous year’s bill. Payment often changes hands between buyer and seller there and then.
Taxe fonci�re is set by each commune and varies wildly, largely depending on what facilities are offered by the mairie. Larger towns and cities tend to be more expensive than villages. If you are househunting, ask your agent how much the taxe fonci�re for each property is so you can compare.
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If you rent out a property on a long-term basis, as the landlord you pay the taxe fonci�re but you can legally charge your tenants for the part that covers rubbish removal (ordures m�nag�res). Some communes separate this out but others may not. If you rent the property out as a holiday let, you will cover the full amount.
There are relatively few exemptions to the taxe fonci�re but if you are over 75, have a low income and are resident in France for tax purposes, you may be exempt. Contact your local tax office for more information.
2) Taxe d’habitation
This is a residence tax based on property. It is payable by whoever occupies a residential property on 1 January of any given year. If you occupy the house yourself, full or part-time, this is you. If you have long-term tenants living in the house then it is them.
If you buy a property on 31 December 2012, you will be liable in 2013. However, if you buy on 2 January 2013, you won’t and it is not customary for a buyer to pay their pro rata share! The bills are sent out around October time and payable by mid-December.
If you are thinking: “Ah, my property is a holiday home and I won’t be there on 1 January...” I’m sorry but you’ll still have to pay, unless you can prove that the house is uninhabitable. ‘Uninhabitable’ is open to interpretation, but generally means unfurnished and with no utilites connected.
If you want to apply for an exemption, you need to do this by contacting the tax office in January rather than leaving it until the bill arrives. I would not recommend trying to blag this as I have dealt with cases where the tax authorities have sent the local police round to check.
The taxe d’habitation includes the TV licence fee (la redevance audiovisuelle), which is €125 in 2012. If you don’t have a TV, you should write a registered letter to the tax authorities to ask for an exemption for this part of the tax.
Payment methods are the same as for the taxe fonci�re and the rates also vary from one commune to the next. Also, do bear in mind that your taxe d’habitation may differ from a previous resident’s as this is means-tested and reductions apply in certain circumstances. Contact your tax office with any queries.
3) Water supply
Water is metered in France which means that the French are very conscious of water usage. If you buy a property, be sure to read the meters on the day you take ownership of the property and communicate this to the water company along with your contact information. It is possible to arrange for bills to be sent to addresses abroad.
When conducting viewings, agents will usually point out the water-saving features of a property such as the canal d’arrosage, a watering channel managed by the commune which some properties have access to for watering the garden, or a forage, which is a borehole giving access to free water. These could end up saving you significant amounts of money.
4) Utility bills
EDF provides most of the electricity in France although the market was deregulated in 2007 and there are other providers such as GDF Suez and Poweo. As with the water, you need to read the electricity meter on entering the property and contact your supplier to set up your account.
There are many different options regarding tariffs, depending on where you live. Some meters are set up with peak and off-peak tariffs (heures pleines/heures creuses), in which case there will be two readings to take. Other houses have different tariffs depending on the colour-coded day: red days are extremely expensive while others are much cheaper. If you are on this kind of tariff, you would be wise to limit electricity use on the red days.
Many houses in France are heated by electricity and currently this is generally thought to be more cost effective than gas although this may change. In our area, the Pyr�n�es-Orientales, it is relatively rare these days to find renovated houses which don’t have some form of heating. Even here in the south of France, I think heating is essential in the coldest months although some hardier souls disagree!
Mains gas in France is limited to larger towns and cities and is rare in smaller villages. We live in Perpignan and have gas central heating but this is certainly not the norm. In less built-up areas, it is common to use oil for heating. This is delivered when you need and order it (often once a year is enough) and stored in a tank, which could be located in a garage, garden or buried underground. Make sure you know where the tank is if you are buying a property heated in this way, and find out who the fuel supplier is so that you can arrange for it to be filled when necessary. It is wise to do this in the autumn to make sure you are full up for the winter months.
Although we live in an area blessed with almost permanent sunshine, sadly solar power is relatively uncommon due to the high cost of installation. If you are a permanent resident, you can benefit from tax credits to subsidise the cost of the panels (but not installation). A builder friend just installed his own panels at a cost of around €2,000. It was during the coldest snap we have experienced in nine years of living here and yet he had piping hot water in abundance and has to cover the panels when he goes away for extended periods to avoid the system overheating. Surely this is the way forward for our planet?
Many properties, particularly the more rural ones, still rely on woodburners and fires for heating. These may have a vent system which feeds hot air into rooms around the house. Wood is a relatively cheap and very charming way to heat a house although much more labour intensive! Wood is sold by the st�re which is one cubic metre. To give you a rough idea of cost, I recently purchased some wood on behalf of a client for €70 per st�re. n
5) Co-ownership charges
If you have a property in a shared building, there will be shared costs associated with the running of the building such as buildings insurance, cleaning and maintenance of the common parts, and any repairs. These are often managed by a managing agent or syndic de copropri�t� and this industry is heavily regulated in France with those operating as managing agents requiring a licence (carte professionelle).
Sometimes the co-owners of a building save on the managing agent’s fees and manage the building themselves although, if this is the case, they still have to adhere to certain rules. The rules regarding how shared buildings must operate are extremely strict. There must be an annual meeting (assembl�e g�n�rale) of all the co-owners who each have the right to vote on any resolutions proposed. For example, if a vote is passed to repaint the fa�ade of a building, quotes must be presented at the AGM and each co-owner votes on whether or not to accept the proposals. Voting power is relative to the percentage of the building each person owns. Costs are also borne according to this percentage; i.e. the more you own, the more you pay.
If you are buying in a shared building, ask to see the r�glement de copropri�t� and the minutes of at least the latest AGM, preferably the last few years. It is worth taking the time to understand this information and refusing to sign the compromis de vente until you have seen it, just to ensure that you are not inheriting substantial costs for works that have already been voted or problems of which you are unaware.
Louise Sayers provides administrative assistance and relocation services to individuals and businesses throughout France
The properties pictured here are available at www.medandmountain.com