Keep a close eye on the decisions of your local council in the coming weeks: they could contain a very unpleasant surprise concerning your property tax.
Property tax is a well-known local tax, levied by local authorities and payable by any owner of real estate. After income tax, it is probably the tax levy paid by the greatest number of people in France. But unlike it, its rate is not the same throughout the territory and varies greatly from one municipality to another.
Like all taxes, however, it increases regularly: at a minimum, its tax base is revised every year according to inflation, and its rate can be modified in large proportions by the communities that collect it. With the galloping inflation of recent years, it has also increased everywhere in France, and even exploded in some cities.
There are, however, several mechanisms for reducing or eliminating property tax on built properties, such as the special exemption for the elderly or disabled and those of modest means, and especially the temporary two-year exemption on constructions, reconstructions and additions to buildings.
This two-year exemption on new homes, renovations or extensions applies automatically to all residential buildings, whether they are primary or secondary residences, according to Article 1383 of the General Tax Code. This is a significant tax incentive for the construction or improvement of housing in France, and a valuable aid for owners.
However, there is a subtlety to which one must be particularly attentive, otherwise one could suffer a serious disappointment the year following the completion of the work. Indeed, this two-year exemption applies by default throughout the territory, each community that collects a share of the property tax can choose to reduce it significantly… or even eliminate it entirely!
For the municipal share of the property tax on built properties, the municipal council can limit the exemption from 90 to 40% of the taxable base, thus making the property taxable up to 60% of its value from the first year. And for the share going to the Public Intercommunal Cooperation Establishment (EPCI), the community council can decide to simply remove the exemption.
But that’s not all. In fact, the two-year exemption from property tax can be modified at any time by the communities, by a resolution taken up to 1er October and which applies to work completed during the same year. As this type of project often lasts more than a year, the tax regime can therefore change along the way and reserve an unpleasant surprise on arrival.
If you have a construction project in progress, contact your municipality or your inter-municipality to check the existing exemptions on the territory of your property. And above all, carefully examine the deliberations taken by these communities between now and 1er October, in order to identify any changes in property tax exemptions.