French President Francois Hollande has announced higher taxes on foreign-owned holiday homes in France. It’s not good news for the 200,000 or so British nationals who own second homes in France and will now have to pay more tax on their rental income – and higher capital gains taxes if they sell their second homes.
The new property taxes are part of measures announced on July 4th by France’s socialist leader to reduce the country’s £8 billion “black hole” budget deficit.
Tax on rental income on second homes in France owned by foreigners will rise from 20 per cent to 35.5 per cent. Capital gains tax on property sales goes up, too, from 19 per cent to 34.5 per cent.
Fortunately timeshare owners are exempt, making vacation ownership an even more attractive proposition in the light of the new measures. In addition to the flexibility timeshare offers, owners don’t have to worry about the practical and financial headaches that can come with actually owning the bricks and mortar.
The rise in tax on rental income will be retrospective, from Jan 1 this year while the hike in capital gains tax applies from the end of this month, July 2012.
Holiday home owners already pay a taxe fonciere, paid by the owner and the taxe d’habitation, paid by those who live in the home. It’s estimated that there are about 360,000 non-resident second home owners in France.