France/Property tax increase: how much, why, impact of work, tax rate deliberations

Year after year, property taxes rise in most French communes. Why is this happening? Who decides? Where is the increase greatest? Will property tax rise again in 2023 and beyond, given inflation and the abolition of the taxe d'habitation? Statistics and explanations you need to know.

Property tax rate increases 2023 in Paris, Bordeaux and major cities and agglomerations

Property tax increase in Paris in 2023

On November 7, 2022, Paris mayor Anne Hidalgo announced a 7-point increase in the property tax rate in 2023, from 13.5% in 2022 to 20.5% this year. The deliberation was adopted on December 13, 2022.

"After the health crisis that cost Paris €1.2 billion, the rise in energy costs (+€100 million in 2023), the measures to increase the purchasing power of public service employees and the increase in the property tax rate, Paris has decided to increase the property tax rate.purchasing power for public service employees and inflation are putting a considerable strain on the operation of our public services," said Paul Simondon, Anne Hidalgo's deputy finance minister, on Twitter.

According to the City of Paris, the impact of this rate hike would be as follows (source Twitter @Paris):

• for a 50 m² apartment: from 438 euros in 2022 to 665 euros in 2023 on average
• for a 75 m² apartment: from an average of 576 euros in 2022 to 874 euros in 2023
• for a 100 m² apartment: from 715 euros in 2022 to an average of 1,086 euros in 2023

According to our calculations, these projections do not take into account the 7.1% increase in rental values (corresponding to the tax base) on January 1, 2023.

This rate increase is in addition to the automatic increase in the tax base due to inflation, leading to a larger rise in the amount payable in 2023.

However, a 100% exemption has been adopted for homeowners who have invested in the thermal renovation of their apartment between 2020 and 2026. This exemption applies to homes purchased before January 1, 1989, for a period of three years. Similarly, homes completed on or after January 1, 2009 with the BBC 2005 label are eligible for a total exemption from property tax on built-up properties for 5 years.

2023 property tax increases in Bordeaux, Lyon, Grenoble and Metz

An increase in the property tax rate is planned or voted in the following cities and agglomerations for 2023:

• City of Bordeaux (33), which plans to increase the municipal property tax rate from 46.38% to 48.48% (source: orientations budgétaires 2023, deliberation of March 8, 2023), an increase of 4.53%.
• City of Lyon (69), increase in the municipal property tax rate from 29.26% in 2022 to 31.89% in 2023, an increase of 9% (vote on the 2023 budget at the city council meeting of March 9, 2023). According to the mayor's office, this represents an increase of "an average of 5 euros per month for 30% of Lyonnais residents" . The metropolitan tax rate remains unchanged at 0.55% (deliberation of March 27, 2023).
• City of Grenoble (69), increase in the municipal property tax rate by 25% between 2022 and 2023, from 52.63% to 65.79% (deliberation of March 13, 2023), representing an annual increase of 265 euros for a 65 m² apartmentout of a total increase of 330 euros, including the revaluation of the tax base; the rate voted by Grenoble-Alpes Métropole on February 3, 2023 remains unchanged at 1.29%.
• City of Limoges (87), 10% increase in the municipal property tax rate from 38.30% in 2022 to 42.13% in 2023 (deliberation of March 21, 2023), with the Limoges Métropole rate unchanged at 2.20%.
• City of Metz (57), 14.3% increase in the municipal property tax rate from 31.47% in 2022 to 35.97% in 2023 (deliberation of March 30, 2023), with the Metz Eurométropole rate unchanged at 2.09% (deliberation of January 30, 2023).
• Ville de Mulhouse, 4.9% increase in the municipal property tax rate from 41.01% in 2022 to 43.01% in 2023 (deliberation of December 14cember 2022), and Mulhouse Alsace Agglomération's rate by +126.6%, from 1.58% to 3.58% (deliberation of December 12, 2022)
• City of Nanterre, property tax rate increased by 4.6%, from 21.97% in 2022 to 22.97% in 2023 (decision of April 3, 2023).

In the following municipalities, property tax rates on built-up properties have been left unchanged between 2022 and 2023:

• Aix-en-Provence (13), maintaining the municipal property tax rate at 32.69% for 2023 (decision of March 17, 2023) and the intermunicipal rate at 2.59% (decision of January 19, 2023).
• Amiens (80), municipal property tax rate maintained at 49.75% for the year2023 (deliberation of March 16, 2023) and the Amiens Métropole intercommunal rate at 6.12% (deliberation of March 16, 2023)
• Angers (49), maintenance of the municipal property tax rate at 54.24% (deliberation of March 27, 2023) and of the intercommunal rate at 2.18% (deliberation of March 13, 2023)
• Annecy (74), maintenance of the municipal property tax rate on built-up properties at 29.79% for 2023 (decision of March 6, 2023) and of the intermunicipal rate at 1.69% (decision of March 23, 2023).
• Argenteuil (95), municipal property tax rate maintained at 38.14% (deliberation of March 28, 2023)
• Aubervilliers (93), municipal property tax rate maintained at 43.12% (deliberation of March 9, 2023)
• Avignon (84), municipal property tax rate maintained at 42.44% (deliberation of December 17, 2022) and inter-municipal rate maintained at 1.61% (deliberation of December 5, 2022)
• Besançon (25), municipal property tax rate stable at 43.72% (resolution of April 6, 2023), and inter-municipal rate stable at 1.54% (resolution of April 13, 2023)
• Boulogne-Billancourt (92), municipal property tax rate maintained at 15.09% (city council resolution of March 30, 2023)
• Caen (14), municipal property tax rate unchanged at 51.03% in 2023 (deliberation of January 30, 2023) and property tax rate voted by the Urban Community stable at 0.96%.
• Clermont-Ferrand (63), municipal property tax rate unchanged at 46.60% in 2023 (deliberation of December 14, 2022), metropolitan rate stable at 2.82%.
• Créteil (94), municipal property tax rate stable at 42.12% in 2023 (deliberation of April 3, 2023)
• Dijon (21), municipal property tax rate maintained at 50.28% in 2023 (deliberation of January 30, 2023), and intermunicipal rate maintained at 1.41% (deliberation of April 13, 2023)
• Le Havre (76), municipal property tax rate maintained at 54.36% in 2023 (resolution of December 12, 2022)
• Le Mans (72), municipal property tax rate maintained at 34.71% in 2023 (deliberation of April 6, 2023) and metropolitan tax rate maintained at 13.09% (deliberation of February 9, 2023)
• Lille (59), municipal property tax rate stable at 48.35% (deliberation of February 3, 2023)
• Marseille (13), municipal property tax rate unchanged at 44.54% in 2023 (deliberation of February 10, 2023), and inter-municipal rate at 2.59% (deliberation of January 19, 2023)
• Montpellier (34), municipal property tax rate unchanged at 52.63% (deliberation of April 4, 2023), in the knowledge that the municipal majority has undertaken not to increase tax rates during its term of office.The Montpellier Méditerranée Métropole property tax rate is also unchanged at 0.167%.
• Montreuil (93), municipal property tax rate unchanged at 41.44% (deliberation of March 29, 2023)
• Nancy (54), municipal and intermunicipal property tax rates unchanged in 2023, at 29.68% and 8.81% respectively
• Nantes (44), municipal property tax rate unchanged at 46.34% in 2023 (deliberation of February 10, 2023), as is the intermunicipal rate at 6.41%.
• Nice (06), municipal property tax rate unchanged at 29.62% in 2023 (deliberation of April 14, 2023), as well as the inter-municipal rate at 6.40%.
• Nîmes (30), municipal rate of property tax on built-up properties unchanged at 53.2% in 2023
• Orléans (45), municipal property tax rate on built-up properties unchanged at 48.37% in 2023, as is the inter-municipal rate at 5.71%.
• Perpignan (66), municipal property tax rate on built-up properties unchanged at 47.15% in 2023, as is the inter-communal rate at 2%.
• Reims (51), municipal property tax rate on built-up properties unchanged at 44.77% in 2023, as is the inter-municipal rate at 1.45%.
• Rennes (35), municipal and inter-municipal property tax rates stable in 2023, at 45.66% and 1.73% respectively.
• Rouen (76), municipal property tax rate on built-up properties unchanged at 48.71% in 2023
• Saint-Denis (93), municipal property tax rate on built-up properties unchanged at 38.94% in 2023
• Saint-Denis-de-la-Réunion (974), municipal property tax rate on built-up properties unchanged at 36.73% in 2023
• Saint-Étienne (42), municipal and intermunicipal property tax rates on built-up properties unchanged in 2023, at 38.85% and 2.60% respectively
• Saint-Paul-de-la-Réunion (974), municipal property tax rate on built-up properties unchanged at 41.77% in 2023
• Strasbourg (67), municipal and inter-municipal property tax rates on built-up properties unchanged in 2023, at 37.44% and 4.60% respectively
• Toulon (83), municipal property tax rate unchanged at 39.39% (budget adopted on December 22, 2022), inter-municipal rate unchanged at 5%.
• Toulouse (31), municipal property tax rate unchanged at 35.35% in 2023, as is the inter-communal rate at 13.2%.
• Tours (37), municipal property tax rate on built-up properties unchanged at 43.44% in 2023
• Villeurbanne (69), municipal property tax rate on built-up properties unchanged at 29.94% in 2023, as is the Lyon metropolitan authority rate at 0.55%.

In the following municipality, the property tax rate will fall in 2023, offset by an increase in the inter-municipal rate:

• Brest (29), property tax rate cut from 40.24% in 2022 to 39.84% in 2023 (deliberation of March 30, 2023) but property tax rate increase from 3.32% in 2022 to 3.72% in 2023 at Brest Métropole level, i.e. an overall rate unchanged at 43.56%.

Property tax rates already set to rise in 2022 in some major cities

Property tax rate increases for 2022 have been voted by some municipal councils (for communes) and some community councils (for communities of communes), in addition to increases in the tax base. Here are a few examples (non-exhaustive list):

• Nantes, property tax rate on built-up properties increased from 42.51% to 46.34%.
• Tours, property tax rate on built-up properties increased from 38.94% to 43.44%.
• Marseille, property tax rate on built-up properties raised from 39.07% to 44.54%, an increase of 14%.
• Grand Paris Seine & Oise urban community (Yvelines), property tax rate on built-up properties increased by 6%, in addition to municipal rates.
• Annecy, property tax rate on built-up properties raised by 1.5 points to 29.79%.
• Montreuil, increase in property tax rate on built-up properties from 38.58% to 41.44%, i.e. an increase of 7.4%.
• Amiens Métropole, increase in property tax rate on built-up properties from 2.57% to 6.12%.
• Brest Métropole, increase in property tax rate on built-up properties from 2.93% to 3.32%.
• Clermont Auvergne Métropole: increase in property tax rate on built-up properties from 2.36% to 2.82%.
• Dijon Métropole: increase in property tax rate on built-up properties from 0.612% to 1.41%.
• Limoges Métropole: increase in property tax rate on built-up properties from 1% to 2.2%.
• Saint-Etienne Métropole: increase in property tax rate on built-up properties from 1.37% to 2.60%, a near doubling (+89.8%)
• Strasbourg Eurométropole: increase in property tax rate on built-up properties from 1.15% to 4.60%, i.e. a fourfold increase
• Toulon Provence Méditerranée: 25% increase in property tax rate on built-up properties, from 4% to 5%.

In these towns and cities, taxpayers have suffered the double effect of a higher tax base and a higher tax rate.

Property tax increases in France: the rise in figures

Average property tax in France on the rise

The average amount of property tax paid by taxpayers has risen steadily in recent years, as shown in the table below (source: DGFiP statistics):

Looking specifically at individuals, average property tax amounted to €694 per home in 2021, compared with €680 in 2020 and €672 in 2019, up 2.1% (source DGFiP Statistiques n°9, June 2022). Property tax is higher on average for houses, at 932 euros (+2.6% on 2020), compared with 760 euros for apartments, up 1.7% year-on-year.

Taking into account all properties owned, the average amount reaches 895 euros in 2022 (+5.4% year-on-year), of which :

• 557 euros for owners with just one property
• 997 euros for owners with two properties
• 1,913 euros for owners with three or more properties

Increase in property tax on buildings and land

Compared with 2021, the tax on unbuilt property will increase by 3.9% in 2022, to 1.160 billion euros, according to tax administration statistics relayed by the DGCL (Direction générale des collectivités locales). Over a seven-year period (2015-2022), revenues from taxe sur le foncier non bâti will rise by 14.4%.

From 2015 to 2022, the total amount of property tax on buildings rose by 23.6% to 36.2 billion euros in France, according to the same source.

Over the period 2011-2021 (10 years) and including ancillary taxes (except the TEOM dedicated to financing household waste collection), the increase in property tax reached 24.9%, according to Unpi, a property owners' association. Over the same period, rents have risen by 7.5% (source: Insee) and the cost of living (inflation measured by the Insee consumer price index - CPI) by 10.4%. In 10 years, property tax has thus risen around 3 times faster than rents and inflation.

Over five years (2016-2021), the property tax increase amounts to 9.4%, compared with inflation of 6.9% and a rent increase of 3% (source: Unpi).

Property tax increases, including ancillary taxes

Taking all property taxes together (built and unbuilt, including ancillary taxes), the total amount of taxes paid by taxpayers, including legal entities, reached (source DGFiP) :

• 46.689 billion euros in 2022 (+30.4% in 10 years, compared with 2012)
• 44.168 billion euros in 2021
• 44.753 billion euros in 2020
• 43.226 billion euros in 2019
• 42.564 billion euros in 2018
• 41.429 billion euros in 2017
• 40.532 billion euros in 2016
• 39.209 billion euros in 2015
• 38.023 billion euros in 2014
• 37.610 billion euros in 2013
• 35.797 billion euros in 2012
• 34.198 billion euros in 2011
• 32.682 billion euros in 2010
• 31.031 billion euros in 2009

The decrease between 2020 and 2021 is due to a change in the calculation basis for industrial premises, as part of the reform of production taxes.

The continuing increase in these amounts is not solely due to the revaluation of the tax base, nor to changes in tax rates. Other factors come into play, such as the increase in the number of taxable premises (new buildings) and their surface area (extensions).

Why the property tax increase?

Who decided to increase property tax in France? How can this be explained? To understand the reasons behind these unfavorable trends for taxpayers, we need to analyze the various components of this tax: the tax base and the tax rate.
We can see that responsibilities are shared between the State and local authorities.

Increase in rental values = increase in tax base

The tax base for property tax on buildings is equal to 50% of the annual rental value (the theoretical rent that could be obtained from the property). However, rental values are subject to an annual update known as "revalorisation forfaitaire", which is the responsibility of the State and not local authorities. Previously, this annual increase was voted each year by Parliament as part of the Finance Act. Since 2018, the updating of property rental values has been set by law (Article 1518 bis of the General Tax Code, or CGI) according to the level of inflation recorded in November of the previous year.

According to our calculations, tax bases have increased :

• by 12.3% over 5 years from 2019 to 2023
• by 18.8% over 10 years from 2014 to 2023

In other words, at a constant property tax rate, property taxes have increased mechanically by 12.3% from 2019 to 2023 and by 18.8% from 2013 to 2023.

For 2023, the increase is the highest since the turn of the century: with annual inflation calculated on the basis of the Insee HICP index reaching 7.1% in November 2022, the tax base for the taxe foncièetax base will rise by 7.1% in 2023, as no mechanism to limit the increase in property tax in 2023 has been adopted as part of the Finance Act for 2023.

This increase means that the amount paid by taxpayers will have risen by a minimum of 7.1% in 2023, even if the commune or local authority decides not to raise its property tax rate.

In 2022, this general increase in rental values has been set at 3.4%, in application of the formula set out in article 1518 bis of the CGI. This rate of increase in rental values for residential premises is equal to the rate of change, between November 2020 and November 2021, in a measure of inflation known as the Harmonized Index of Consumer Prices (HICP).

Other factors may lead to an increase in the tax base:

• increases following the completion of work
• the abolition of certain optional exemptions following deliberations by local governments
• expiry of property tax exemptions
• updating of tax bases by the tax authorities in a given territory (example: around 100,000 homes affected in Isère over the 2018-2021 period).

Over the 2012-2023 period, the rise in property tax is due more to an increase in tax bases than to rate inflation (ToutSurMesFinances.com based on DGCL statistics (BIS n°135, page 7, BIS, report OFGL finances des collectivités locales, BIS n°151, page 7, BIS n°164, BIS n°175).

Historical revaluation of property tax bases

Rising property tax rates

Increases in property tax rates are the second main driver of property tax increases over time. However, the rate is set by each of the local authorities that levy the property tax (until 2020 for the département, which has not levied property tax since 2021):

• commune
• intercommunality
• syndicate of communes
• metropolis

This is also referred to as the "rate power" of local authorities. Each local authority's tax rate is voted on every year, for example by the municipal council.

According to David Lisnard, President of the Association des maires de France (AMF), 19% of communes will increase their property tax rates in 2023. In 2022, 16% of communes increased their rates, according to the DGFiP (15% in 2021).

These rates tend to increase over time: the average property tax rate on buildings rose from 34.5% in 1999 to 43.4% in 2010, and to 49% in 2022.

Other explanations for property tax increases

Why are local councillors raising property tax? For Unpi, one of the explanations lies in the ease with which these tax hikes can be passed, as they are rather popular with the electorate at a time when the taxable public (property owners) are not the most inclined to protest in the streets.

It can also be seen as an indirect consequence of the drop in state allocations to local authorities, which have fallen by almost 4 billion euros from 2017 to 2020 (-10%). At the same time, certain expenses borne by the départements (which could vote their own property tax rates until 2020) are inflationary, such as the APA (Allocation personnalisée d'autonomie).

On the other hand, we can't say that property tax increases are left- or right-wing. To our knowledge, no study has been published to establish a correlation between the political color of a local executive and property tax increases.

Finally, Unpi points out that the creation of new tiers of local government can lead to a total increase in the tax rate, with a metropolitan rate added to the communal rate without any compensation in the form of a reduction in the latter.

Property tax hikes: increases in 50 major cities

Unpi has surveyed property tax increases in France's 50 largest cities over 5 and 10 years to the end of 2021 (2022 data will be made public in autumn 2023). The data relate to property tax on buildings proper, to which certain ancillary taxes (TSE, TASA, Gemapi tax) are added, but not TEOM.

As a result, property tax has hardly fallen at all over these two periods (only the city of Argenteuil has seen a 0.7% drop in property tax over 5 years). The increase in tax bases has been partially offset by rate cuts over the last 5 years in the following cities:

1. Lille (+0.3% increase from 2015 to 2021, while the tax base has risen by 5.2% over the period)
2. Tourcoing (+0.5%)
3. Nîmes (+1.6%)
4. Roubaix (+1.9%)
5. Caen (+2.9% )
6. Bordeaux (+4.4%)
7. Nancy (+5%)
8. Saint-Denis (+5.1%)

Note: some of these increases are partially offset by decreases in TEOM (tax on the collection and treatment of household waste).

Villeurbanne, Limoges: highest increases over 5 years

Over five years (2016-2021), property taxes have risen by an average of 6.8% in France's 50 largest cities, compared with +9.4% for the country as a whole (source: Unpi).

Unpi points out that Villeurbanne is the city where property owners have seen the highest increase in property tax (+16.4%) over the period, due to a 2.5-point rise in the municipal rate.

Limoges ranks second in terms of increases over 5 years (+15.6%), due to a combination of rate rises in the various local authorities (city, metropolis and Haute-Vienne department). Including TEOM, the increase is more moderate (+13.3%).

Villeurbanne, Orléans, Lille, highest increases over 10 years

Over a 10-year period (2010-2020), Villeurbanne posted the biggest property tax increase among large cities, with a surge of 34.9%, followed by Orléans (+33.6%) and Lille (+32.6%).

Property tax increases by département: rise in département share

On average, the département's share of property tax (the portion of the contribution paid under the rate voted by the département) increased by 11.5% from 2015 to 2020, including the legal increase in tax bases of 6.1% over the period. Yvelines saw the biggest rise in property tax (+62.15%) over the period.

Over the 2010-2020 period, the Val-d'Oise département's share of property tax increased the most, ahead of Yvelines and Corse-du-Sud.

Since 2021, the 2020 departmental rate has been automatically allocated to the commune, as part of the local tax reform.

In 2020, the last year in which departmental councils still had control over tax rates for their share of property tax, only one department increased its rate (Ardennes), and five decreased it (Allier, Alpes-Maritimes, Yvelines, Deux-Sèvres and Morbihan). The latter department is thus lowering its property tax rate for the fourth year running (16.50% in 2016, 16.34% in 2017, 15.85% in 2018, 15.45% in 2019 and 15.26% in 2020).

Large property tax increases: why?

How can a property owner explain a big increase in property tax from one year to the next?

There are several possible reasons for a sharp increase:

• a sharp rise in the annual revaluation of tax bases (+7.1% in 2023, after +3.4% in 2022)
• expansion work
• the addition of taxable features to the property (swimming pool, etc.)
• updating of tax bases at commune, inter-commune or département level by the(Direction générale des finances publiques) and local authorities.
• regularization following failure to declare a swimming pool or extension

With regard to the latter, an experiment conducted by the DGFiP in 2021 in 9 départements (Alpes-Maritimes, Var, Bouches-du-Rhône, Ardèche, Rhône, Haute-Savoie, Morbihan, Maine-et-Loire and Vendée), led to the detection of undeclared swimming pools by automating the use of public aerial photos taken by IGN, using artificial intelligence. A total of 20,356 swimming pools have been detected in these départements, and will be newly taxed in 2022 under the property tax payable for the year 2022. The system will be extended to all departments in mainland France in 2023, with a view to taxing new swimming pools in 2023. Letters have been sent to more than 120,000 pool owners, asking them to regularize their situation. On average, property tax on swimming pools amounts to around 200 euros a year.

In addition, an experiment is also planned to detect undeclared buildings, again with the aim of increasing the taxable income, which has so far remained untaxed. In particular, the aim is to identify house extensions.

Will property tax continue to rise?

In France as a whole, an increase in property tax seems unavoidable, given that the tax base is rising by 7.1% this year - the highest increase since the turn of the century, according to our statistics. The total amount of property taxes on both built and unbuilt properties will rise mechanically. Given current inflation levels, this effect should be repeated mechanically in 2024.

However, from one year to the next in certain areas, contributions may fall as a result of significant rate cuts, particularly in the pre-election period.

With the transfer of the département's share of the taxe foncière sur les propriétés bâties (TFPB) to the communes, the départements no longer have any influence on tax levels: only the vote on rates by the commune and/or intercommunal body has any influence. The taxe foncière sur les propriétés bâties (property tax on built-up properties) is now the main source of tax revenue for communes, given the abolition of the taxe d'habitation (council tax) on principal residences. In other words, municipal taxation is now based almost entirely on property tax on built-up properties, which means that the bulk of direct local tax revenue is concentrated on property owners.

With inflation driving up the cost of certain municipal expenses, new rate hikes have been voted for 2023 in some communes. Property tax increases can also be the counterpart of political choices, such as financing new expenses, like free public transport on certain days of the week.

Veranda, terrace, swimming pool, garage... Property tax increases after work

Most extension or amenity work can lead to an increase in property tax. This applies in particular to the following elements and ancillary constructions:

• garage
• cellar
• attic
• terrace
• accessible roof terrace
• veranda
• swimming pool
• garden shed
• garden shed

These items must be declared to the local tax office. Even in the absence of a declaration, a surcharge may be applied, for example if the administration learns that a new construction has been added without being declared.

Since property tax is calculated on the basis of the situation existing on January 1 :

• work carried out in 2022 has an impact on the 2023 property tax ;
• and those carried out in 2023 on the amount payable in 2024.

Source: www.toutsurmesfinances.com

---