After a tumultuous election, Emmanuel Macron won the final round of voting. We’ll take a look at some of his real estate taxation policies.
President-elect Macron’s real estate program includes a flagship measure that delights a large majority of French people, exempting them from paying the property tax, while a not insignificant minority does not digest the prospect of the wealth tax turning into tax on the real estate rent.
1) Exemption from the tax
President-elect Macron promised to exempt from the particularly unpopular tax, the tax on housing; about 80% of the French people. As the candidate of En Marche, it is a question of suppressing for the middle and popular classes an ‘unjust tax’ which, according to him, “weighs the most, in relative, on the middle classes”. It is true that its incomprehensible methods of calculating often results in high amounts of tax in certain popular communes and lower amounts in some other popular sectors.
Instead of a reform of the rental values (on which this tax is based) started for years but never set up for housing, hence Emmanuel Macron’s move towards a more radical measure.
2) The tax on real estate rent
One of the promises which helped win him the 2017 election was his intention to ‘deeply reform’ this highly controversial tax by removing ‘the part that finances the real economy’, that is to say the holding of company or shares, to make it a ‘tax on immovable property’.
If the President-elect has explained in the meantime that it is out of the question to raise rates, thresholds or to apply to exemptions, he opposes front-end a real estate investment that would merely provide an annuity for securities that would finance the real economy.
While real estate is already one of the most taxed assets, it would remain the only one to be affected by the wealth tax.
3) Tax on fictitious rents?
The idea is to tax owners whom occupy their dwelling on the basis of a fictitious rent that they would pay to themselves if they were tenants. Emmanuel Macron firmly denied wanting to apply this principle, while rumours indicated otherwise. But as various think tanks and research circles regularly put the idea on the table, several professionals believe that we must remain vigilant on this point. This is all the more so as income from the housing tax and the TFR should fall mechanically, hence the fear of seeing reinforced the status of cash cow of the real estate property.
For further financial advice, visit the Cabinet Roche & Cie website for detailed financial advice on French property.