Property tax, a hot topic for French homeowners, is back in the spotlight. In 2024, property owners will face a further increase in this tax, already on the rise in 2023. This adjustment is directly linked to inflation, which influences the rental value of real estate.
In 2023, the property tax increased by 7.1% in France's 200 most populous cities. This upward trend will continue in 2024, according to forecasts by INSEE and experts in the field.
Why this increase? Since 2018, the basis for calculating the property tax, i.e. the cadastral rental value, has been indexed to the Harmonized Index of Consumer Prices (HICP). This index rose by 3.9% in November 2023, leading to a corresponding increase in rental value. This value is a key factor in calculating property tax.
" Property tax depends on the rate voted by the commune and the inter-communal authority, applied to a rental value", explains Frédéric Zumbiehl, legal expert at the Union Nationale des Propriétaires Immobiliers (UNPI), contacted by actu.fr. If the rental value increases, even without a change in the municipal rate, the tax increases proportionally.
And that's not all: municipalities also have the option of increasing their tax rates. If they do, property tax could rise even more than anticipated. To understand the potential impact of such an increase, we need to look back to the year 2023, when the tax rose by an average of 9.3% in major cities, despite a 7.1% increase in rental value.
Frédéric Zumbiehl stresses the variability of increases in different communes, pointing out that decisions are taken at local level. So, depending on each commune's decision, property tax increases could vary significantly.
Paid by 57% of the population, property tax represents a significant share of municipal revenues, often used to finance essential local services. Yet this successive increase directly affects homeowners' finances.
To mitigate the impact of this increase, homeowners can opt to pay their property tax on a monthly basis. This option allows payments to be spread out over the year, providing a degree of budgetary flexibility. Applications for monthly payment can be made on the official tax website up to December 31.
Property tax is therefore a major issue for French homeowners in 2024. With an increase almost certain, it's crucial to prepare accordingly to manage this unavoidable expense as effectively as possible.
In a report, the French Audit Office (Cour des Comptes) proposes a reform of the property tax calculation to better tax households with large real estate holdings, deeming the current tax archaic and unequal. Court president Pierre Moscovici, speaking on Capital, emphasized the urgent need to improve tax fairness, as the current tax system does not reflect the real economic value of property, thus favoring the wealthiest households. This criticism is based on the fact that property tax is calculated on cadastral rental values defined in 1970 and rarely updated, taking no account of changes in property prices, particularly in cities where values have risen considerably.
