Property Taxes in France: Land Tax, Second Home Tax & Wealth Tax (IFI)
When buying property in France, the ongoing annual taxes must be factored in alongside the purchase price and transaction costs.
As a French real estate lawyer, I advise my clients on the tax implications of owning property in France.
Get in touch →1. Ongoing taxation of property in France
When buying property in France, the ongoing annual taxes must be factored in alongside the purchase price and transaction costs. The nature and level of the tax burden depends on several factors and can, at least in part, be influenced by the buyer.
As a French real estate lawyer, I advise my clients on the tax implications of purchasing property in France and can also refer them to tax advisers from my professional network where needed.
2. What ongoing taxes apply to property owners in France?
Land tax
(“taxe foncière”)
Annual tax on built and unbuilt land. Applies to all owners regardless of country of residence.
Residence Tax
(“taxe d’habitation”)
Since 2023, applies only to second homes and holiday properties — no longer to primary residences.
Vacant property tax
(“taxe sur les logements vacants”)
Applies to properties that have been unoccupied for at least one year in areas with tight rental markets.
a. Land tax in France (“taxe foncière”)
French land tax distinguishes between tax on built properties (“taxe foncière sur les propriétés bâties / TFPB”) and tax on unbuilt land (“taxe foncière sur les propriétés non bâties / TFPNB”). For owners of a holiday home or other residential property in France, the tax on built properties is the most relevant.
The land tax on built properties is levied annually (reference date: 1 January) on all built properties located in France by the relevant local authority. The tax is calculated on the basis of the notional rental value of the property (“valeur locative cadastrale”) — corresponding to the theoretical annual rent that could be achieved on the local rental market if the property were normally occupied and let.
The applicable tax rate (“taux d’imposition”) varies from one local authority to another. Before purchasing property in France, prospective buyers should therefore enquire in advance about the level of local taxes — either from the seller or from the relevant local authorities.
Calculating the land tax: The amount of land tax is based on the notional rental value. The seller will typically disclose the exact amount. In many areas, a refuse collection levy (TEOM) is also charged alongside the land tax — this may be passed on to tenants as a service charge.
Various tax exemptions may apply in specific cases — for instance, where the taxpayer was over 75 years of age on 1 January of the relevant tax year or where certain income thresholds are not exceeded.
Where a property is sold during the course of a tax year, the land tax is in practice apportioned between seller and buyer on a pro rata basis from the date of transfer of possession.
b. Residence tax in France (“taxe d’habitation”)
Like the land tax, the French residential tax is levied annually as at 1 January. The taxpayer is not the owner of the property but rather the person occupying it on 1 January of the relevant tax year. The tax therefore applies not only to owner-occupiers but also to tenants and even to persons occupying a property rent-free.
Since 2023, the residential tax no longer applies to properties used as a primary residence. However, it continues to apply to properties used as a second home. Owners of holiday homes and second homes in France whose primary residence is elsewhere — including international owners — must therefore continue to budget for this tax.
Second homes in France: International owners with a primary residence outside France and a holiday property in France remain liable for the “taxe d’habitation” on their French property. The tax applies as at 1 January of the year — even if the property is only used for a few weeks annually.
Unlike the land tax, the residential tax is not apportioned pro rata between seller and buyer on a mid-year sale of the property.
c. Vacant property tax in France (“taxe sur les logements vacants / TLV”)
The primary purpose of the annual vacant property tax is to incentivise owners to return properties to the rental market. The tax applies only in certain areas — in particular those forming part of a continuous urban area with more than 50,000 inhabitants where there is a marked imbalance between housing supply and demand (such as Paris and Nice).
The tax applies only where the relevant property has been unoccupied for at least one year. Properties subject to the residential tax — including second homes — are therefore excluded from its scope. The amount of tax is calculated on the basis of the notional rental value of the property.
3. When does the French property wealth tax (IFI) apply?
a. Property wealth tax (“impôt sur la fortune immobilière / IFI”)
The French property wealth tax (“impôt sur la fortune immobilière / IFI”), which replaced the former wealth tax (ISF) in 2018, applies to individuals whose net property assets exceed €1.3 million. The reference date is always 1 January of the tax year.
Whether foreign property assets are also taken into account depends on the taxpayer’s country of residence. Individuals resident in France are taxed on their worldwide real estate assets — both in France and abroad. Individuals not resident in France are taxed only on the net value of their property assets located in France.
Properties must be declared at their actual market value as at 1 January. French tax law provides for a 30 % discount on the market value of the property in which the taxpayer has their primary residence.
The IFI is calculated on a progressive scale based on the net value of property assets:
| Net asset value | Rate (%) |
|---|---|
| Below €800,000 | 0 |
| Above €800,000 and up to €1,300,000 | 0.50 |
| Above €1,300,000 and up to €2,570,000 | 0.70 |
| Above €2,570,000 and up to €5,000,000 | 1.00 |
| Above €5,000,000 and up to €10,000,000 | 1.25 |
| Above €10,000,000 | 1.50 |
b. 3 % annual tax on property held through legal entities
Where property in France is held not by individuals but by French or foreign companies, the property assets of those legal entities are subject to an annual tax of three (3) per cent of the value of the property assets. The 3 % tax applies to all legal entities holding property located in France — in particular companies, partnerships, SCIs, foundations and trusts.
The French state uses this tax to prevent the IFI that would otherwise be owed by individuals from being avoided through the interposition of asset-holding companies. The tax burden can, however, easily be avoided by making a simple declaration to the French tax authorities disclosing the individuals who are the beneficial owners behind the company. The declaration must be filed by 15 May of the relevant year at the latest.
Do you have questions about the taxation of your property in France?
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