Taxe foncière, taxe d’habitation, taxe de séjour… in the mountains, it all seems pretty complicated. If you own a chalet in the French Alps, it’s important to know which taxes apply to you, especially if you intend to rent it out.
This comprehensive guide explains the different taxes, plus practical tips on how to reduce/avoid certain ones.
Please note, due to official legislation guidance, in some instances, we are only able to link to French versions of external web pages.
(The information here is a general guide only, which does not take into account your personal circumstances, is not intended to be tax advice and should not be relied upon as such. If you have any questions about taxes, we suggest that you consult your tax adviser or local tax authorities. Please contact us if you would like the contact details of a tax adviser who specialises in the vacation rental industry. Please note that we do not update this information in real-time, so you should check and confirm if the laws, tax rates or procedures have changed recently.)
Taxe foncière (property tax)
Taxe foncière (property tax) is an annual tax payable by all property owners. It is based on the value of the property and the proceeds are used to finance local public services (road maintenance, pavements, public lighting and green spaces etc). It is paid directly to the Mairie (town hall) of your commune.
How is it calculated?
This local tax is calculated on the basis of the rental value of the property. This corresponds to the annual income that the property would generate if it were rented out.
A tax percentage, voted for by the local authorities, is then applied to this figure. This figure is different for each municipality, especially in the Alpine region.
As the basis for calculating the property tax is the rental value of the property, there are many factors that can affect it, such as the features of the property, its size and its capacity.
Chalet owners are required to declare any changes to their accommodation, such as extensions or the addition of certain equipment, to the local council so that the tax can be recalculated.
Who is liable for taxe foncière?
Taxe foncière is payable by the owners of the property on January 1 every year. If you buy your chalet during the year, you will have to pay a proportion of the property tax for the number of months in that year that you have owned it.
Tenants of a property are not affected by this tax, which is not related to the use of the property but to its nature and value.
Which factors affect the amount of taxe foncière ?
Here are some examples of the features that can affect the cost of property tax:
- The value of the property.
- The size of the plot of land on which it sits.
- The materials used in its construction.
- The facilities (swimming pool, garage, etc).
- Any renovation work carried out.
How can you reduce the level of taxe foncière?
Some local authorities may decide to grant total or partial exemption from property tax for a period of three years if you have carried out energy-saving work on your property.
However, certain conditions must be met:
- Your home must have been built before January 1, 1989.
- The amount of your energy renovation expenses must exceed 10,000€ per dwelling in the year preceding the year in which you apply for the exemption. Alternatively, it’s 15,000€ per dwelling if the expenses were paid in the three years preceding the year in which the exemption applies.
Taxe d’habitation or council tax
Who is affected by taxe d’habitation?
Taxe d’habitation, (council tax), is payable by the person who lives in the property as their principal residence on January 1 of the current year. This means that the tenant or a free occupant of the property may be liable.
In addition, it applies whether you use the property for your principal residence or your second home. So if you buy a chalet during the year, you will have to part of the taxe d’habitation in proportion to the number of months you occupy it.
The French government’s 2018 reforms of taxe d’habitation provides for a gradual abolition of the tax for main residences. Thus in 2020, about 80% of households whose tax income was below a certain threshold were exempt from this tax.
For the remaining 20%, there was a 30% reduction in 2021. It was 65% in 2022 and should disappear completely in 2023, when no household should pay taxe d’habitation on their main residence.
Please note, however, that taxe d’habitation will continue to apply to second homes and vacant properties. If you rent out your second home or chalet, holiday tenants are not liable for taxe d’habitation, but they must pay taxe de séjour, or tourist tax.
How is taxe d’habitation calculated?
Taxe d’habitation is levied for the benefit of local authorities, which vote on the tax level.
It is calculated according to the value of the property, which is determined by the tax authorities. In addition to this, the tax rate is set each year by the commune, and varies from one to the next.
Which factors affect the amount of taxe d’habitation?
The amount varies according to the features of your property (size, level of comfort, etc) and may differ depending on your personal situation on January 1 of the tax year.
Your income, the composition of your household, etc are taken into account when calculating the tax.
Who can obtain a reduction in taxe d’habitation?
Your reduction or rebate will depend on your taxable income and the size of your family. For more information on taxe d’habitation levels and to check if you are eligible for a reduction, consult this reference table.
Tourist tax for holiday guests
Most communes ask holiday guests staying in the mountains for a financial contribution in the form of taxe de séjour, or holiday tax. This is generally used to finance the development of local tourism, events or the maintenance of green spaces.
Who has to pay taxe de séjour?
Guests staying in a tourist residence, a furnished holiday home or a holiday rental are required to pay a tourist tax at the end of their booking.
This means that the guests who stay in your chalet will have to pay you a tourist tax, calculated in advance, according to the number of guests, the length of stay and the quality of your property.
The taxe de séjour is payable to the owner of the accommodation or to the booking service acting on behalf of them. However, the payment of this tax is often included in the price of the holiday rental.
How can you find out the amount of taxe de séjour?
The amount of taxe de séjour must be displayed at the property and on the bill provided to guests. It must also be available for consultation at the Mairie or the local tourist office.
The amounts can vary according to the commune where the guest is staying. Some communes charge a single amount and others do not charge a tourist tax.
In general, there is a capped rate scale – the higher the official classification of your property, the higher the tax. Rates can vary between 0.20€ and 4.20€ per adult per night.
To find out the rates of tourist tax by commune, use the French government’s search tool.
Who is exempt from taxe de séjour?
- Anyone aged under 18.
- Seasonal workers in the commune.
- Anyone in emergency accommodation or temporary housing.
- A guest who pays rent below the amount set by the commune.
Tips to help reduce/avoid taxes on your chalet
Invest in energy-efficient equipment
Taxe foncière is calculated according to the annual rental value of your chalet. This amount is determined by criteria such as living space, comfort, facilities and the general condition of the property.
Investing in energy-efficient equipment can reduce the rental value of the chalet and the property tax. Examples of such equipment include solar panels, a heat pump or an efficient heating system.
Before starting the work, check with your local Mairie to see if the planned work will qualify for an exemption. If you carry out renovation or alterations at your chalet, declare them to the tax authorities – such changes may result in an increase in the rental value of the chalet.
Mandatory taxes and their exemptions
When a chalet is used for rental purposes, the taxes are not the same as those levied on a chalet for personal use. In this case, the owners are considered to be professionals or businesses and therefore they must pay additional taxes.
Business property tax (CFE)
Renting out furnished property is a professional commercial activity that is subject to the business property tax or la cotisation foncière des entreprises. This applies whether you are a company or an individual.
However, there are some exemptions, particularly according to your turnover and if your rental property is part of your main home in specific cases. Click here to find out more about CFE exemptions.
Tax on vacant properties
In some areas, owners of rental chalets must also pay a tax on vacant accommodation. This tax is intended to reduce the number of vacant properties and can be quite a significant sum.
Click here to find out more about tax on vacant properties.
Try the simulator on the Public Service portal to find out which zone your property falls into.
As you can see, owning a chalet involves a fairly complex system of taxation. Each of these taxes has its own characteristics and terms of payment. It is important to understand them so that you can avoid any unpleasant surprises, and to keep in line with the various administrations from the start of your project.
Investing in energy-efficient equipment and choosing the right building materials can sometimes earn you tax breaks.
Did you find this article helpful? Check out some of our other interesting topics, such as:
If you would like to discuss your rental investment project, please arrange a call with our experts. With almost 350 chalets under rental management in the Alps, OVO Network can help you maximise your rental income and occupancy rate.
Finally, find out how much you could earn by renting out your chalet with our rental income calculator.
