French President Francois Hollande has announced plans for higher taxes on foreign-owned holiday homes in France. If these come in, it’s not good news for the 360,000 or so non French residents who own second homes in France and will now have to pay more tax on their rental income – and higher capital gains taxes if they sell their second homes.
The new property taxes are part of measures announced on July 4th by France’s socialist leader to reduce the country’s £8 billion “black hole” budget deficit.
Tax on rental income on second homes in France owned by foreigners could rise from 20 per cent to 35.5 per cent. Capital gains tax on property sales could go up, too, from 19 per cent to 34.5 per cent.
The proposals target second home owners and not timeshare owners, making shared vacation ownership an even more attractive proposition in the light of the new measures. In addition to the flexibility timeshare offers, owners don’t have to worry about the practical and financial headaches that can come with actually owning the bricks and mortar.
The proposal is that the rise in tax on rental income will be retrospective, from Jan 1 this year while the hike in capital gains tax applies from the end of this month, July 2012.
RDO understands that it is likely that the proposals will be challenged as being illegal under EU law and there is therefore a strong likelihood they will be dropped.