France has long been a favoured country for Europeans and others to buy holiday homes, but that could change if a controversial new tax is introduced. The proposed new French property tax will hit the owners of second homes in metropolitan areas where it is believed there are housing shortages, for example Paris. Some coastal areas are also expected to be targeted. This is bad news for foreign property owners who keep their holiday homes to themselves, but is not expected to affect investors who rent out their residential real estate. – JC
By Helene Fouquet and Mark Deen
Nov. 4 (Bloomberg) — If you own an apartment in Paris that’s not your primary residence, brace yourself for a new tax.
French President Francois Hollande is planning a new levy next year on second homes in areas with housing shortages, looking to raise 150 million euros ($188 million) annually.
The new levy would represent 20 percent of the existing housing tax and be imposed on properties in about 30 metropolitan areas in France, including Paris. Owners of second homes would pay the levy to local government.
Hollande pledged several times that there would be no new levies. Still, with a budget deficit that the government expects to top 4.1 percent of gross domestic product in 2015 and an economy that will barely grow 1 percent, the French president is looking into ways to fill the state’s coffers.
More than 174,000 properties in Paris, or about 16 percent of the housing in the French capital, are second homes. That share is rising, according to the city’s rental watchdog, having climbed 3 percentage points in the past five years.