Apartment or house? By the Sea or on the mountains?
Before you start buying the holiday home of your dreams, it is important to ask yourself the right questions and not to overlook the details about the potential tax impact of this acquisition.
The owners of these properties occupy them for short stays, regularly for a short week of holidays or even a weekend.
Note that these second homes can also be a rental investment.
Second or holiday homes in France are subject to both the property and the housing tax. Even if the dwelling is not occupied all year round, its owner or tenant will still have to pay no local taxes.
The TV licence fee will not be due, as it only applies to principal residences.
There is no exemption or cap for occasional housing. Persons with a secondary residence will not benefit from a deduction for the calculation of the wealth tax or for inheritance tax. No tax credit will be granted to them if they carry out work in their holiday accommodation.
At the time of purchase, this type of residence does not benefit from any assistance (zero rate loan, Pinel, etc.) at the time of purchase. In addition, the purchase of a second home does not entitle you to an income tax reduction and does not allow a 20% discount on the value of the property for the calculation of the property wealth tax (IFI). Nor is it possible to benefit from a tax credit for housing capital expenditure (replacement of the boiler, installation of solar panels, etc.).
The housing tax
For secondary residences as well as for primary residences, the housing tax is generally due in November. However, for some properties, it is only collected in December. This tax is based on the rental value of the property.
The housing tax is higher for second homes, the latter being more generally located in tourist regions (Provence, Côte d’Azur, etc…) and rates vary according to local authorities.
In 2015, the housing tax increased by 20% in some regions, called tense areas, where the rental market is declining.
Even secondary residences in the seasonal rental are subject to the housing tax. It should be noted that the Paris Council decided at the end of January 2017 to increase the housing tax on second homes to 60%, compared to 20% until now.
Capital gain on the second home
Until 2011, the sale of a secondary residence was exempt from capital gains tax if the property had been inhabited for at least 15 years.
Since the 2012 Finance Act, a new tax system has been introduced for the sale of occasional residences. Capital gains of more than 50,000 euros realized on second homes are subject to a surcharge ranging from 2 to 6%.
However, owners of occasional dwellings may be exempt if the capital gain on the secondary residence is used to purchase a principal residence.
The capital gain generated after the sale of a second home is taxed on income tax at a rate of 19% after deduction, depending on the length of time the property is held. If the age exceeds 22, the owner will be exempt.
The capital gain is also subject to social security contributions, up to 15.5%.