New tax rises proposed by French president Francois Hollande are set to impact thousands of Brits with holiday homes in France. The new French government is keen to tackle the countryââ¬â¢s budget deficit and have put forward proposals to tax wealthy property owners.
Keep reading to learn more about people owning property in France could be affected.
New taxes for foreigners owning property in France
The French government has announced it plans to increase taxes on foreign-owned second homes.The Daily Telegraph reports that ââ¬Ëtax on rental income would rise from 20 per cent to 35.5 per cent, and capital gains tax on property sales would rise from 19 per cent to 34.5 per cent.ââ¬â¢
In addition, the increase in tax on rental income will be backdated to 1 January 2012 while the rise in capital gains tax takes effect from the end of July 2012. This gives homeowners precious little time to sell their homes to avoid the increased tax.
These taxes are in addition to two other taxes which holiday home owners already pay to the French government. These are the taxe fonciere, which is paid by the house owner and the taxe d’habitation, which is paid by those who live in it.
The French finance ministry said the new rule would raise around ã40 million in 2012 and ã200 million in 2013. The law changes will affect about 60,000 rental properties in France whose owners make an average profit of ã12,000.
Jean-Claude Cassac, the secretary general of the French estate agency federation, in the Dordogne, home to thousands of British expatriates and holiday home owners, said the new move was a ââ¬Ëcatastropheââ¬â¢.
He said: “The plummeting pound meant that the English had almost disappeared from the Dordogne house market. With this, it’s as if they want to totally kill off the foreign home owner market in France.”
