Are French property owners set for some good tax news?
Lower year-on-year inflation means that next year’s tax increase should be lower - but not all owners will be affected equally
Homeowners in most communes saw their property tax bills rise by 3.9% in 2024
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People who own property in France could find that their taxe foncière (a type of property tax) bill in 2025 will not increase by quite so much due to the lower rate of year-on-year inflation, however this will not be the same in all areas.
Property tax (taxe foncière) notices have either already arrived or are on the way for people who own property in France.
Read more: LIST: Key dates in 2024 for France’s property owner’s tax
The rate of this tax increased by around 3.9% for almost all homeowners in 2024, but was higher in some communes such as Nice, where it was nearly 20% higher.
However, estimates for 2025 suggest that the rate should not increase by quite so much.
Why will increases be lower next year?
Taxe foncière is reviewed each year against the valeurs locatives cadastrales (VLC), which represents a property’s theoretical rental value.
The VLC is calculated by a complex analysis that accounts for property improvements, public services in the area, and many other features. The system is set for an overhaul sometime after 2026.
However, once VLC has been calculated for a property, it is subject to a rate that is applied nationally to all taxe foncière bills.
Read more: Taxe foncière explainer: Who pays and the exemptions
Prior to 2018, this national increase was set by parliament, but since a reform that year, has been tied to year-on-year inflation levels.
The year-on-year inflation figure used for the calculation is drawn from the figures given in the Indice des prix à la consommation harmonisé (a consumer goods index) recorded by state statistics body INSEE.
Rising inflation, particularly during the Covid-19 pandemic, resulted in steep rises in the taxe foncière bill, including in 2023 (based on 2022 year-on-year inflation), when it increased by 7.1% - the highest annual increase in over 20 years.
The rate of year-on-year inflation slowed in 2023, meaning the national increase on this year’s taxe foncière bill is 3.9%.
At present, the rate of year-on-year is lower, with economists predicting it will not surpass 2%, and may even drop to around 1.5%, resulting in a lower increase in 2025’s property taxes.
Will all homeowners benefit from this?
The national increase to bills is applied to all homeowners who pay taxe foncière, however some may be partially or fully exempt.
Local authorities can vote to levy a higher tax rate – or in rare circumstances, a lower rate – which only applies to properties in that commune.
Taxe foncière is one of the last streams of income that communes can use to pay for local services.
As a consequence, some communes see the taxe foncière as the only way to balance their budget and rely on it to make up for income lost due to the end of taxe d’habitation on main homes.
In 2023, dozens of communes levied surcharges of 10% or more on top of the national rate. In Paris this surcharge was 50% higher.
These steep increases are less widespread in 2024, however several local authorities in cities including Nice and Saint-Etienne have levied an additional 10% on top of the national rate.
Read more: 2024 French property tax: which areas are seeing the highest rises?
