What is the property tax in Paris?
Dec 3, 2024
3 minutes
The property tax is an essential element for any real estate investor or owner in Paris. While it may seem complex, understanding how it works is essential for accurately assessing the profitability of an investment in the capital.
You may have noticed that your property tax has recently increased in Paris, due to the increase in the applicable rate from 13.5% to 20.50% between 2022 and 2023. However, in 2024 the property tax in Paris will only rise by 3.9%, an increase due to the revaluation of rental cadastral values.
What is property tax?
The property tax is a local tax paid annually by property owners, whether rented or not. It is intended to finance local authorities, including the municipality and public establishments for intercommunal cooperation. The property tax varies from one city to another and depends on each property.
In Paris, this tax applies to owners of residential properties (houses, apartments), as well as to those of professional or commercial premises.
How is property tax calculated in Paris?
The property tax is based on two main elements:
a. The cadastral rental value of the property
This is an estimate of what the property could generate in annual rent if it were to be rented out.
This value is determined by the tax administration based on criteria such as the area, the condition of the property, its location, and its amenities.
b. Local tax rates
These rates are set each year by the City of Paris and intermunicipal organizations.
In Paris, the tax rates are historically low compared to other major French cities.
Calculation example: If the cadastral rental value of your apartment is €10,000 and the tax rate is 13.5%, your property tax will be: €10,000 × 13.5% = €1,350.
Specificities of property tax in Paris
a. A relatively low property tax
Compared to other major French metropolises, such as Lyon or Marseille, the property tax in Paris remains moderate. This is partly explained by the high level of tax revenue from transfer taxes and by an advantageous local tax policy.
b. Temporary exemption for new constructions
New housing in Paris generally benefits from a total exemption from property tax for the first two years following completion. This is an important point to consider for investors in new real estate programs.
c. Differences between districts
The disparities between districts are limited since the property tax primarily depends on municipal decisions, and Paris is a unique municipality. However, the rental value can vary depending on the neighborhoods, thereby impacting the amount of the tax.
The impact of property tax on real estate profitability in Paris
The property tax must of course be taken into account in your profitability calculation. Although it is quite low, it can represent a significant portion of the costs for an investment.
That being said, the property tax in Paris is lower than in Lyon or Bordeaux, another reason to invest in Paris!
It is also possible to improve your profitability by carrying out energy efficiency improvement work, which, under certain conditions, can give rise to temporary reductions in the property tax.
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