Is taxe d’habitation required for flats let in French farmhouse?

Reader Question: I have a modest holiday rental business with two holiday apartments in our old farmhouse. I pay a lot of taxe foncière (TF), but taxe d’habitation (TH) stopped last year. I also pay CFE (company property tax). I have received a taxe d'habitation bill now for thousands of euros and do not understand how this is possible.

There are several issues to consider and you will likely need to book an appointment to discuss them with the tax office.

Firstly, it is correct that, as owners of the house you should pay taxe foncière based on the whole of the house. This tax is based on one half of the VLC (valeur locative cadastrale) – a theoretical annual rental value assigned by the tax office – multiplied by a percentage rate set by the mairie and, sometimes, an intercommunal body.

People doing holiday rentals can be subject to CFE, assuming they make more than €5,000 a year in turnover. 

However, there are exceptions, which include where you are renting out part of your own home unless your mairie voted to remove this: so this is an element to check. 

If you are liable, it will probably be levied at a minimal level (which varies from one area to another, and by turnover), rather than calculated against the VLC of the whole house – most of which you are not using for rentals.

Read more: Is Capital Gains Tax levied on land in France?

As for taxe d'habitation, it is possible to be exempt for properties which, as of January 1 of a given year, are going to be dedicated exclusively that year to holiday letting with no possibility of you using them yourself (tax offices can ask for evidence; a good example is if a property is let out via an agency or website, showing year-round availability). 

In this case, only CFE, and not TH, is due.

The potential complication is if the flats are not self-contained properties, but for tax purposes are part of your own main home.

There is usually no taxe d'habitation on a main home, but if the tax office knows that the property is used, at least in part, for holiday rentals, this may have caused the assessment for this tax. 

We would advise making clear that it is your own main home, but a part of it is used for this activity. They may agree to cancel the taxe d'habitation.

Read more: Is it possible to spread French income tax payments across the year?