Taxation of Second Homes in France: What You Need to Know

/in /by

Second homes often evoke thoughts of holidays, relaxation, and getaways. But from a tax perspective, they have a much more practical definition: a second home is any property you own or hold rights to that is not your primary residence. That means you don’t live there regularly, and it’s not where your personal and professional life is centered.

Owning a second home in France comes with specific tax responsibilities. This guide outlines the key taxes involved, your reporting duties, and potential exemptions available.

Mandatory Property Use Declaration

Since 2023, property owners in France must report how each property they own is used. This measure was introduced alongside the phase-out of the taxe d’habitation on main residences. If you owned property on January 1, 2023, you were likely required to declare whether it is a main residence, rented property, or a secondary residence.

Once your situation has been declared, you don’t need to resubmit the information unless there’s a change in usage or ownership. However, if you’re purchasing property in France, be aware that this declaration is required.

Local Taxes and Exemptions

Property Tax (Taxe Foncière)

All built properties, such as houses, apartments, or even fixed residential boats, are subject to property tax. This applies if you are the owner or hold usufruct rights as of January 1 of the tax year. The amount due is calculated based on the cadastral value and local rates set by municipalities and departments.

There are some temporary exemptions:

  • Newly built or rebuilt structures may be exempt for two years.

  • Energy-efficiency renovations may allow a three-year exemption, under certain conditions.

Note: Age or income-based exemptions apply only to main residences.

Council Tax on Second Homes (Taxe d’Habitation)

Although the taxe d’habitation has been eliminated for primary residences, it still applies to second homes — that is, furnished properties that are not your main residence. The tax is assessed based on your ownership status as of January 1 each year and calculated using the property’s rental value and local rates.

In areas with housing shortages, municipalities may impose a surcharge ranging from 5% to 60%. Exemptions are limited but include:

  • Individuals who move into a long-term care facility and no longer occupy the home.

  • Properties used as bed-and-breakfasts or classified furnished tourist accommodations in designated rural revitalization zones.

Vacant Property Taxes

Two taxes may apply if your property remains unoccupied:

  • Tax on Vacant Dwellings (TLV): Applies to properties in areas with housing pressure that have been vacant for over one year. The tax starts at 17% in the first year and rises to 34% thereafter.

  • Taxe d’Habitation on Vacant Homes (THLV): Applies to properties that have been empty for more than two years, in areas not covered by the TLV. The rate mirrors the standard council tax for second homes.

You may avoid these taxes if:

  • The vacancy is involuntary;

  • The property is occupied for over 90 consecutive days per year;

  • Significant renovation or repairs are needed;

  • You’re already paying taxe d’habitation on the property as a second home.

Renting Out a Second Home

Letting your second home — whether short-term or long-term, furnished or unfurnished — can generate income, but this income is taxable.

  • Unfurnished rentals are considered property income.

  • Furnished rentals fall under industrial and commercial profits (BIC).

Your tax obligations will vary depending on the rental type and your total income. You may benefit from a flat-rate allowance or deduct actual expenses incurred.

Capital Gains Tax on Sale

When selling a second home, the profit (capital gain) is subject to:

  • 19% income tax

  • 17.2% social contributions

However, you benefit from a progressive allowance:

  • After 5 years of ownership, income tax liability reduces each year, leading to full exemption after 22 years.

  • For social contributions, full exemption is granted after 30 years.

Wealth Tax on Real Estate (IFI)

If your total net real estate assets exceed €1.3 million, you are liable for the real estate wealth tax. This includes second homes.

To assess your liability:

  • Calculate the market value of all properties you own;

  • Deduct eligible debts, such as loans for acquisition or construction.

Owning a second home in France offers many advantages, but it also involves navigating a range of taxes and legal obligations. Being informed about your duties and available exemptions will help you manage your property efficiently and avoid any unexpected surprises.