Brits planning an investment in a French cottage for rent may want to start looking for property a little closer to home, after the new centre-left government pushed through a controversial tax increase.
France’s highest authority, the Constitutional Council, has approved legislation which will see the addition of a 15.5 per cent “social charge” for foreign owners of second homes in the country, on top of the existing capital gains tax. This brings the total levy payable by foreign holiday home owners to 35.5 per cent.
The tax is part of new president Francoise Hollande’s raft of changes designed to raise €7.2 billion (£5.8 billion) to meet a deficit reduction target of 4.5 per cent. The change in legislation was pushed through despite many in the property market believing the rules to be in breach of European Union law. It is though that as many as 200,000 Britons may be affected by the change.
French property expert David Yeates told France 24 said there is a “sense of anger” about the new levy. “Many feel it will discourage investment in France and it’s contrary to existing laws,” he said.
Research from Guide2MidiPyreneees.com appears to back Mr Yeates’s claim. A poll run by the website found that while most existing owners of cottages for hire in France will not be looking to sell their home, many of those who have been thinking about making a purchase will now be looking more closely at whether it is financially viable.