Holiday home tax changes passed, questions remain

THE new legislation put forward by François Hollande's to increase taxes on foreign-owned second homes in France has passed its final hurdle.

The Conseil Constitutionnel (paragraphs 55 to 59) has approved the changes to tax levels on rental income which will rise from 20% to 35.5%, and capital gains tax on property sales that will rise from 19% to 34.5%.

Many believe that the increases, which cover 'social charges' and enable contributors to access health care and unemployment benefit, are against EU law.

This is because the charge is being levied against non-resident second-home owners who will not be able to use these benefits as the naturally live outside of France, but it might require a legal challenge for this to be recognised.

And another important thing to consider is that the changes to tax levels on rental income only apply to unfurnished properties, clearly you would struggle to let a holiday home that requires your guests to bring their own bed and table and chairs.

The changes to the capital gains tax may put a break on some who want to buy a property in France, but again if someone is buying a place long term eventually the tax on gains is reduced and it seems the levy is more an attempt to squeeze some euros out of speculators.

Update:
"There is some debate about whether the charges on rental income apply only to unfurnished property – due to the wording of the first draft – however, the final wording added a sentence to catch all property income so it looks like both furnished and unfurnished properties are affected." (via The Connexion)