Unoccupied homes and second homes are being targeted by legislators. The government has introduced a number of measures to discourage this, including tax on vacant homes and council tax. These taxes, which some might describe as “confiscatory”, will apply to vacant homes, second homes and other furnished premises not used as a main residence (note that properties occupied for more than 90 continuous days during the year in question are not considered vacant).

To avoid being taxed, or even over-taxed, it is necessary to inform the tax authorities of the use of the property held by each owner, or risk being fined…

1. Tax on vacant homes in “high pressure” areas

In areas considered to be “tense”, vacant dwellings, i.e. dwellings that are habitable but unfurnished and unoccupied, are subject to the annual tax on vacant dwellings (CGI, art. 232). This tax applies automatically, without any intervention by local authorities.

2. Application of council tax on second homes to vacant dwellings outside “high pressure” areas

In other areas (other than the “tense” zones), municipalities may decide to make vacant accommodation subject to council tax on second homes and other furnished premises not used as a main residence (CGI, art. 1407 bis).

3. Retention of council tax on second homes

Although council tax has been abolished for homes occupied as a main residence, it will continue to apply to second homes, defined as furnished premises not used as a main residence.

What’s more, under the provisions of article 1407 ter of the General Tax Code, local authorities in “stretched” areas can vote to increase the council tax on second homes by between 5% and 60%.

Declaratory procedures

1. A compulsory declaration for all owners (natural or legal persons)

In order to identify the use of dwellings owned by taxpayers, and more specifically those that remain liable for council tax and/or tax on vacant dwellings, the Finance Act for 2020 introduced a new reporting requirement for all owners (individuals and legal entities).

For each of their premises, landlords (individuals and legal entities) will have to state in what capacity they occupy them and, if they do not occupy them themselves, the identity of the occupants and the period of occupancy (as at 1 January 2023).

Taxpayers have until 30 June 2023 to do this. After that date, only a change of situation will require a new declaration.

2. Practicalities

The declaration of use can be accessed via the secure area of the impots.gouv.fr website and the “Manage my property” online service. Occupancy data known to the tax authorities is pre-populated.

3. A fine of €150 per dwelling for failure to declare by 1 July 2023

Article 1770 terdecies of the General Tax Code states that failure to comply with the obligation to declare property will result in a fine of €150 per property for which the required information has not been provided to the tax authorities. The same fine is payable for omissions or inaccuracies.

In conclusion…

The noose is tightening… with this new reporting obligation, the tax authorities will have a complete map of the homes owned by taxpayers and the ways in which they are held (direct or indirect).