French tax adds to woes of British second home owners

French tax adds to woes of British second home owners

30 Aug    Finance News, In Business

Britons with second homes in France are facing a “galling” increase in taxes on properties they can visit for only half the year.

Owners have already been hit with post-Brexit restrictions that limit visa-free stays in the European Union to 90 days in any 180-day period and the “double whammy” with higher rates is said to be fuelling discontent among the 86,000 British households with second homes across the Channel.

Pensioners who used to spend several months a year in holiday homes are reported to be particularly irritated by the residency restriction. There is further bad news with a planned increase in the residence tax, one of France’s two main local taxes.

“If you are paying more taxes for a property and you are not allowed to go there when you want it adds insult to injury,” Steven Jolly, a First World War battlefield guide with a second home in Normandy, said.

The residence tax was formerly paid by all homeowners in France, but under a reform introduced by President Macron it is now imposed only on those with second homes. Last year the tax was an average of €772 for a house and €941 for a flat and this year it is to rise.

The increase will be a minimum of 7.1 per cent but could be much more as 3,399 councils have been allowed to apply a surcharge that could increase the bill by up to 60 per cent. Many of these councils are in regions popular with British owners of holiday homes.

The surcharge is applicable in areas where the housing market is under pressure and where locals struggle to buy or rent homes. It is designed to ease market tensions by dissuading people from using their properties as second homes. The surcharge was initially limited to 1,136 councils in big cities and tourist resorts but has now been extended to a further 2,263 authorities in rural areas.

In Brittany, where 156 councils have been given authorisation to increase the residence tax by up to 60 per cent, about 12 per cent of the region’s two million or so properties are second homes — and their owners have faced anger and protests in recent months from locals claiming they are being frozen out of the market.

Activists for the Breton independence movement claim to have carried out arson attacks on up to six second homes this year.

Many Britons are likely to be hit by the tax surcharge. They own about 8,900 second homes in the region, representing 53 per cent of the overall number of foreign-owned properties, according to the National Institute of Economic Studies and Statistics.

The gloomy news does not stop there. France’s second local tax, called the property tax, which applies to main and second homes, is also going up. Paris council, for instance, has decided upon a 51.9 per cent property tax increase while Grenoble in eastern France is imposing a 25 per cent rise. Many other councils are applying double-digit increases.

The rises are causing discontent among all homeowners in France but Jolly said they were particularly galling for Britons with second homes. He said that the group had been ignored during Brexit negotiations.

If Britons want to stay more than 90 days out of 180 in the EU they need to apply for a long-stay visa, which costs £99 and involves extensive red tape and interviews with French officials.

Britain gives six months of visa-free travel to EU citizens.

Karen Tait, the editor of French Property News, said higher local taxes coupled with EU visa restrictions were a double whammy for British owners of second homes in France. She said that the measures were causing frustration but there was little evidence that Britons were deserting France or abandoning plans to buy homes there.

But a survey of more than 700 second home owners published this month by The Connexion, a website for expats, found that almost two thirds of Britons had considered selling up because of the 90-day rule. Many felt aggrieved and emphasised the contribution they made to local economies.

Jolly, who is campaigning for a change in the rules to make it easier to stay in France for more than 90 days at a time, said that he would have to return to the UK in October. “But I would like to be able to choose when I go,” he said.

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