French budget 2013: changes in real estate taxationThe French Government presented the 2013 budget on Friday, which included changes to the taxation of real estate, designed to stimulate the sector.
The goal set by the government is to generate the construction of 40,000 new homes in 2013.
Rental investment system
The changes include a new rental investment tax scheme (from 1st January 2013), in which individuals who buy a new property for rent will receive a tax deduction equivalent to 18% of the amount invested (to the limit of ?300,000), spread over nine years. To take advantage of this, landlords will have to rent apartments out at a price 20% lower than the average market price.
Higher taxes on land
To discourage investors from hanging on to a piece of land without building, the government plans to raise taxes and discontinue allowances on undeveloped land where housing need is strongest.
Tax on vacant properties widened
The tax on vacant properties will now apply to cities of over 50,000 inhabitants (previously 200,000) where there is a significant gap between supply and demand for rental properties. The new tax will apply to properties left unoccupied for over a year, increasing from 12.5% in the first year (based on rental value) to 25% in the years thereafter.