Over 3 million homes in metropolitan France are currently unoccupied, representing over 8% of the total housing stock. This increase in vacant properties is driving up real estate prices and creating housing shortages, particularly in urban areas. In response, authorities implemented a tax on vacant homes in 1998 to encourage owners to rent or sell. The tax rates are adjusted annually, and exemptions exist for certain property conditions. Municipalities manage their tax rates, with potential increases allowed.
In metropolitan France, over 3 million homes are currently unoccupied. According to INSEE, this alarming number represented more than 8% of the total housing stock in 2022. This statistic reflects a significant rise, considering that there were just under 2 million vacant properties three decades ago.
The increasing number of vacant homes is contributing to a surge in real estate prices. These uninhabited properties are limiting the availability of housing, particularly in urban centers where nearly 85% of the population resides. This shortage is making it increasingly difficult for students, young professionals, and families to find suitable accommodations.
In response to this growing issue, public authorities took action in 1998 by introducing a tax on vacant homes through the law against exclusions. This tax aims to motivate property owners to return their vacant homes to the rental or sales market. It specifically targets areas experiencing housing tension, where the demand for homes far exceeds supply. These municipalities often report the highest rents and real estate prices. Notably, this year, the tax has been extended to include all municipalities facing rental pressure, which encompasses those with a significant number of second homes. Essentially, this tax serves as a counterpart to the housing tax imposed on second residences, but it applies to unfurnished properties instead.
An Increasing Tax Rate
Owners or usufructuaries of vacant residential properties are required to pay this tax. To qualify, the property must be habitable (enclosed and roofed), provide basic amenities (like running water, sanitation, and electricity), and lack sufficient furniture for living. Additionally, if anyone has resided in the property for more than three months during the tax year, it does not qualify as vacant.
Similar to the housing tax, the tax on vacant homes (TLV) is calculated based on the property’s cadastral rental value, which reflects the annual rent that could be generated if the property were leased. Each year, the Ministry of Finance adjusts this amount based on inflation rates, which saw a 3.9% increase on January 1, 2024, marking a total rise of 15% since 2021. This value is then multiplied by 17% for the first year of vacancy and by 34% for subsequent years.
It’s important to note that if you own multiple vacant properties, you are liable for the tax on each one. This year, you can find this information in your impots.gouv.fr account. The payment deadline is December 16 for paper submissions and December 21 for online payments.
Be cautious if you consider declaring the property as a second home. The housing tax for second homes is also on the rise, which could lead to a tax audit if not reported accurately.
A Housing Tax on Vacant Homes for Other Municipalities
Certain types of property owners may qualify for exemptions from this tax. If your property is not intended for residential purposes, remains vacant through no fault of your own (you are actively trying to rent or sell it), has a tenant who has occupied it for more than 90 days, or requires extensive renovations (with costs exceeding 25% of the property’s value), you may be exempt.
Conversely, the housing tax on vacant homes (THLV) is applicable in all other municipalities not impacted by the TLV. These municipalities administer the tax collection themselves, and the rate for the THLV typically aligns with the local housing tax rate. However, municipalities retain the discretion to increase this rate further.