A new Property Tax for 2nd home owners in France?

Posted by admin in Business, Property Investment, Property Owners Info | May 16th 2011

Last Wednesday, (11 May) President Sarkozy’s cabinet approved a draft measure to impose a new tax on owners of second homes in France.

If confirmed this legislature will affect French owners if they are resident abroad but keep a second home in France and it will also affect holiday-home owners who are resident abroad and keep a holiday home in France, whether they rent it or not.

UPDATE 18th June 2011: From FR2DAY.com –  http://www.fr2day.com/property/french-holiday-home-tax-scrapped

“A proposed property tax for non-resident property owners will not now proceed. After a cabinet meeting in Paris this afternoon, French Transport Minister Thierry Mariani announced that the measure has been scrapped.”

The draft is expected to be passed by parliament in time to become law in 2012, and will leave hundreds of thousands of people who own holiday homes in France face paying a new annual tax equal to 20% of the property’s rental value.

How this new proposed tax is to be implimented and measured is unclear at this point.

Government ministers said that second home owners should help pay for French public services.

‘Being the owner of one or more second homes implies that one benefits directly or indirectly from local and national public services, like the police, legal system and national infrastructure,’ the finance ministry said.

Critics of the new second home tax are already questioning whether it is legal under European law.

Not to be forgotten, though, are the broader reforms to Wealth Tax which this bill is to fall under.

Wealth tax for individuals with assets valued between €800,000 (£698,000) and €1.3 million (£1.1 million) is to be abolished this year.

From next year, assets from €1.3 million to €3 million will be taxed at 0.25%, and assets of more than €3 million (£2.6 million) will be taxed at 0.5 %, replacing four bands with a top rate of 1.8%. Wealth is calculated by adding up the value of assets and deducting loans such as mortgages on property. The proposed changes are likely to cost the government around €900 million per year, and the new tax on second homes would reduce the loss.

What they give with one hand, they take with the other! FML.

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