Taxes: the housing tax on the main residence disappears


Posted Sep 24, 2022, 11:00 AM

Residence tax, continuation and end. For the last time this year, part of the French will pay the housing tax on the main residence, due by owners and tenants. These are the 20% of the wealthiest households, the others having already been exempt from this tax since 2020.

Exempting the wealthiest households was not part of Emmanuel Macron’s campaign program in 2017. It was the intervention of the Constitutional Council that was behind this extension of the measure to all households. The trajectory has been divided into three stages: reduced by 30% last year, the bill for the wealthiest is reduced by 65% ​​this year, then by 100% next year.

purchasing power

This tax reform, the total cost of which reached 18.5 billion euros, will remain as one of the most emblematic of the Macron years, with the abolition of the wealth tax. The government has put it forward a lot to make it a symbol of its defense of purchasing power.

It has, however, raised criticism. “The tax was paid by almost all the inhabitants of each municipality and made it possible to raise their awareness of the cost of local public services, which could limit requests for the extension and improvement of these services and therefore the increase in public expenditure” , thus regrets François Ecalle, former magistrate of the Court of Auditors, who drew up an assessment of the tax measures of the first five-year term for the Montaigne Institute.

Local finances

The disappearance of this tax on main residences, the amount of which varies from one municipality to another (600 euros on average), gave rise to an intense debate in Parliament on the compensation mechanism for local authorities. A profound reform of local finances was thus adopted in 2019.

As shown in a report by the General Directorate of Public Finances (DGFIP) published in July, this has led to a sharp increase in the share of taxes paid by households – property taxes, tax on household waste, VAT fractions – in the local authorities’ basket of resources.

In 2021, these “household” taxes represented 80% of local tax resources compared to 69% in 2020. Economic taxation, which includes the contribution on the added value of companies (CVAE), represented the remaining 20% ​​(compared to 31% previously).

Not for second homes

The State also levied 3.1 billion from “overcompensated” municipalities last year and paid 3.7 billion euros to “undercompensated” municipalities, according to a correction coefficient mechanism established in addition to resource transfers. . In 2021, 51% of the municipalities were in a situation of overcompensation greater than or equal to 10,000 euros, 30% of the municipalities were undercompensated, and 9 were in a “neutral” situation because they did not collect tax on housing, according to the DGFIP.

If the housing tax disappears for the main residence, taxpayers are not done with the tax on second homes. And in some cases, the bill is skyrocketing: cities in tight areas (with a housing deficit) voted this year for a housing surcharge of up to 60%, the maximum allowed.

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