Tuesday, June 07, 2011
Proposed tax on French holiday homes
There's been quite a lot written & said about the proposed new tax on French holiday homes.
Last night I read a new "global briefing" from exclusive agents Knight Frank which was so good that I thought it was worth sharing. You can read the full paper here.
In essence we have two forms of "council tax" in France, taxe fonciere and taxe d'habitation - both of which are calculated on a property's rental value. Even when taken in combination these are usually well below the equivalent tax you would pay, for example, in the UK.
The proposed tax would equate to 20% of the valeur locative cadastrale (VLC) - a theoretical rental value of the property set by the local tax office - and would apply from January 2012 if approved by the French parliament this summer.
If you read the Knight Frank briefing paper you'll see that, even if approved, the new tax will have a relatively marginal effect. They give an example of a tax of €280 pa on a property worth €700,000 (well, it is Knight Frank!).
Indeed, with new changes (already ratified) to the wealth tax then France is looking an increasingly tax efficient country to retire to.
It's nice to see that the chap from Knight Frank finishes with this, bullish, sentiment:
"With the anticipated weakening of the exchange rate now more likely than ever, we expect British buyers to return to the market".
I have always liked those nice folk at Knight Frank (even going back to when there was still a Mr Rutley) - let's hope they're right with that final prediction.
PLEASE NOTE THAT THIS DAFT IDEA OF TAXING SECOND HOMES HAS NOW BEEN SCRAPPED - 20 JUNE 2011