Holiday Home Insurance
 

Massive Tax Hikes for French Holiday Homes

 

French holiday homes will see their tax increase as part of the Government’s plan to fill the £8 billion defect in the country’s budget.  This tax increase on rental income and sale profits could cost the home owner thousands of pounds more a year.  These tax proposals form part of a range of taxes totaling 7.2 billion euros this year to try and fill the revenue shortfall left by slowing economic growth.


If the plans go ahead, the rental income tax will rise from 20% to 35.5% and be backdated to the 1st January this year.  This is an increase from £200 to £355 on a rent of £1,000 a month.  The Capital Gains Tax on selling a holiday home will rise from 19% to 34.5%.  This is an increase from £19,000 to £34,500 on a home selling for £100,000 and applies from the end of July 2012.  These charges will apply to anyone who owns property in France and live aboard.   However, money spent on renovations on certain categories of property can be offset against the capital gains tax.


There are already two taxes on holiday homes: ‘taxe fonciere’ which is paid by the home owner and ‘taxe d’habitation’ which is paid by those who live in it.


It is estimated that around 200,000 Britons have holiday homes in France.


The taxes form part of a spending plan against the urgings of Germany to impose more spending cuts. However, the proposal may not take place as the taxes could breach EU laws if they discriminate against other EU nationals.


France isn't the only European country to increase property taxes. In Greece last September, a new property tax was introduced to plug a €2bn (£1.7bn) budget shortfall.


If you own a holiday home in France it is important that you check that your insurer is happy to insure a holiday home which is not in the UK. My Holiday Home Insurance is one of the UK’s leading providers of Holiday Home Insurance and will be happy to provide advice on insuring a holiday home which is outside the UK.

 
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