Taxation: everything you need to know about tax on a vacant residence
In France, and notably in Paris, a residence left unoccupied for several months risks being subject to the Tax on Vacant Properties. Analysis.
Introduced in 1998 and becoming more stringent in 2013, the Tax on Vacant Properties (Taxe sur les logements vacants – TLV) applies to certain real estate owners. It was brought into force by the French government in order to ‘encourage’ such owners to place their empty property on the market for sale or rental. Let’s take a look at this area-specific tax regime.
The property affected
This tax affects unfurnished residences.
Note: secondary residences are not affected.
What it means to be “vacant”
A property is considered “vacant” as soon as it is left unoccupied for a period of over 90 consecutive days in a year, calculated from 1 January of the relevant tax year.
Note: there are close to 100,000 unoccupied residences in Paris (+36% in the past decade).
Where the tax applies
The tax is not applicable throughout France, only to specific cities defined as “continuous urban zones of more than 50,000 habitants”. It affects 28 conurbations, almost 1,150 municipalities in France.
Available exemptions
- a residence that is involuntarily vacant
- a residence undergoing significant building works in order to make it habitable
- a residence on the market for sale or rent that has yet to find a buyer/tenant
- a residence earmarked for demolition or rehousing in the context of urban development
Tax rates
The tax rates operate on a sliding scale. 12.5% of the property’s rental value in the first tax year, rising to 25% in the second.
The amount depends on the district and the size of the residence.
For example: the tax could be around €600 for a one-bedroom place in Paris.
Beware! The owner of several empty residences is at risk of paying multiple taxes.
Note: this tax is not self-assessed. The Tax Office will send a tax bill (as it would for property and housing tax) as soon as it is aware that the property is vacant (no payment of housing tax, no gas or electricity supply).