Buying a house in France? Watch out for desperate governments

A few years ago, when house prices in the likes of Spain, France and Portugal were beginning to look remarkably cheap, I said that while it all looked very tempting indeed, anyone wanting to buy a holiday home should proceed with some caution.

Why? Taxes. Desperate governments tax things that can’t move. Things such as houses. And the easiest houses to tax are houses belonging to foreigners. No surprise then that President Hollande’s government yesterday had a go at “wealthy foreigners”. 

This isn’t the first time – a few years ago France raised the capital gains tax on the sale of second homes. This time, however, the new tax is not triggered by selling a home but by owning an empty one.

France has an equivalent of our council tax – the taxe habitation – and the idea, says finance minister Michel Sapin, is to add a surcharge to this payable in areas where “demand far outweighs supply”. That doesn’t include many rural areas, but does include Paris, Toulouse, Lyon and a variety of seaside areas such as Nice (the Telegraph estimates this will take in about 10,000 British owners).

Right now, the suggested level of surcharge is low – according to Les Echos it will come to a mere €90 extra a year in Paris. But, as ever these days, the direction of travel is clear. 

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