The Expats Guide to French Property Tax for UK Residents

This article clarifies how French property taxes work for British citizens and discusses budgeting as critical for successful property acquisition

Buying a holiday home or second residence in France is aspirational, whether you dream of relaxed weekends at a restored chateau in the French Riviera, dream of a charming heritage apartment in the heart of Paris or wish to invest in a stunning villa overlooking the glittering coastline of St Tropez.

The complication for many non-French residents is that recent changes to taxation levies for second homeowners may have an impact on your plans or mean that a second home you already own is subject to a higher annual tax burden.

Chase Buchanan Wealth Management, the global expat financial advisory experts, have compiled this brief guide to clarify how property taxes in France work for British citizens and why careful budgeting is key to successful property acquisition.

Understanding Reforms to French Property Taxes for Second Homeowners

The French tax authorities levy a tax called the taxe d’habitation. While this charge has existed for several years, from January 2023, it only applies to vacant properties and second homes—owners of residential properties they live in as their primary residence are exempt.

As part of the changes, legal owners of French properties must now submit a declaration called the declaration d’occupation, which clarifies the status of their real estate in terms of who is living there and whether the property is a rental asset or a second, non-primary home.

UK owners are liable to file this return and pay the resulting tax since it applies to all real estate owners irrespective of their tax residency or nationality. Property owners who do not already have a French tax number will need to set one up to file declarations online.

While most property owners affected will have already complied, given the initial deadline of 30^th June last year, it is essential that new investors or buyers are fully aware of their tax obligations and the mandatory need to register for a tax number and file the appropriate declaration.

Further changes mean that a far greater proportion of municipal governments also now have the power to impose a further surcharge against second homeowners. The local governments in areas considered zones tendues – or those with housing shortages – have the right to charge additional rates of up to 60% of the initial tax obligation.

We recommend you seek professional, reliable advice to ensure you have full oversight of any regional surcharges that are likely to apply.

French Tax Obligations for Non-Resident Property Owners

One of the first steps we always advise any expat to take is to analyse their tax residency position. Although this may seem obvious, a surprising number of people inadvertently become tax residents outside of the UK without realising it.

While the tests used to determine tax residency can become complex, the general rule of thumb is that you could potentially become a French tax resident if one or more of the following criteria apply:

• Your main home is located in France.
• You spend 183 days or more a year in the country.
• You own a business or operate as a professional in France.

Checking your tax residency status matters because, although you may be liable to pay property taxes and local surcharges regardless, becoming a tax resident means you must declare and pay tax against all income and assets worldwide within France.

The annual wealth tax is a prime example. The Impôt sur la Fortune Immobilière (IFI) is payable by property owners with real estate assets valued at €1.3 million (£1.11 million) or more. Non-residents may be liable to pay the IFI if they own French properties above this value, but real estate owned in other countries will not be considered.

If you become a tax resident and own properties in the UK, France and other countries, all of your real estate will be combined to determine whether you are liable to pay IFI taxation and when calculating the total amount payable.

Calculating the French Taxes Payable on Your Property

The taxe d’habitation is now payable only against second homes. The tax rate is calculated based on a nominal assessed value determined by the local municipal government, with an average charge of up to roughly €20 per square metre, including a 3.9% increase to the adjusted rates from 2024 onward.

Other taxes to be aware of include:

• The municipal second homeownership surcharges mentioned, which are based on between 5% and 60% of the initial tax valuation, depending on the region.
• Taxe foncière: a property ownership tax paid by all homeowners. It is calculated similarly to the taxe d’habitation based on a nominal annual rental value set by the local authorities.
• Wealth tax applies only to property over €1.3 million, with non-residents liable only if properties within France exceed the threshold. Residents liable for the tax can claim a reduction of up to 30%, but non-resident homeowners must pay the full liability. Rates vary, with an upper cap of 1.5%.
• Income tax is levied against rental income based on the French tax tables, with the highest rate of 45% applied to incomes exceeding €177,106 (£150,780).
• Capital Gains Tax may be payable when selling a second home, with a standard rate of 19% calculated against the net profit made. Some non-residents are subject to further social charges of up to 17.2% depending on the value of the taxable gain.

Property owners may be expected to pay further municipal charges, equivalent to council tax in the UK, which cover services such as waste disposal and water supplies. While the expense may be nominal, each outgoing linked to your property should be properly accounted for.

Professional Assistance Calculating French Property Tax Liabilities

Owning a second home in France can carry with it a number of potential tax liabilities, and while many are fairly manageable, omitting one of these tax charges from your calculations could mean you are faced with an unpleasant surprise when your tax bill arrives.

The best way forward is to consult with an experienced, reputable wealth management team with full knowledge of the tax regimes both in France and the UK, who can advise on how property ownership, investments or sales will affect your tax obligations at home and overseas.

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About Chase Buchanan Private Wealth Management

Chase Buchanan is a highly regulated wealth management company that specialises in providing global finance solutions for those with a global lifestyle. We are global financial advisers, supporting expatriates around the world from our regulated European headquarters, and local offices across Belgium, Canada, Canary Islands, Cyprus, France, Malta, Portugal, Spain, UK and the USA.

Chase Buchanan Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission with CIF Licence 287/15.

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