Housing taxation: property owners in the crosshairs of the Court of Auditors

They don’t fly away. Following the December 14 rant by the president of the French Construction Federation (FFB), who feared a 5.5% drop in activity in 2024 or even a recession, professional urban manufacturing federations are condemning “an incomprehensible abandonment of the government”. Starting with the Federation of Real Estate Developers (FPI), although in conjunction with the government to reduce the output prices of new housing, as Minister Vergriete confided Gallery.

Also read Housing crisis: Minister Vergriete announced that he wants to reduce the prices of new properties

However: the manifesto was co-signed by the Housing division of the FFB, the Social Union for Housing (USH), which brings together social landlords, the National Real Estate Federation (FNAIM), which represents agents, builders, landlords and promoter Procivis, the Union of Real Estate Unions (Unis), the National Union employers’ notaries (Unne), the Union of Architects (Unsa) and the National Union of Construction Economists (Untec).

“Blocking of residential routes, barriers to professional mobility and reindustrialisation, difficulties in obtaining housing for those who want to be owners, restrictions on the supply of social and private rentals, the lowest number of Hlm approvals and the number of applicants at the highest level, students giving up their studies due to lack of accommodation, the complexities of MaPrimeRénov, etc.: these are painful situations that the French experience on a daily basis,” warn economic agents.

Court of Auditors for a more “coherent” tax system

It is in the light of this situation that we must read the Court of Auditors’ latest report entitled “Towards a more coherent housing tax system”. According to the “wise men” of rue Cambon, if there is accommodation “special feature” WHO “subject to special taxation”, it is also “today they face new or central challenges that are not without impact on tax systems”.

“The current economic climate, marked by a rise in interest rates and a corresponding fall in lending, highlights the difficulties facing households and the new build sector,” Financial Judges note.

Their thesis: taxation is “unprepared for current challenges and must become more cohesive to find a better balance between incentive systems and broader neutrality”. She is balanced “disconnected from the economic value of goods”.

For a “major” reform of the real estate tax base

The Court of Auditors is also promoting the reform “main, important” : a review of the property tax base, paid only by owners, to establish a direct link with the market value or market value of housing.

“Housing taxation, despite costly incentive programs, reinforces the market and is not adapted to the new environmental challenges of buildings in France,” he argues again.

The “wise men” of rue Cambon even assess the effects of zero-rate loans on household solvency “uncertain”. And this while the French Construction Federation has just asked to move the PTZ to 40% throughout the territory and re-evaluate its standards to ” quickly restart the market, respond to very current demand, allow the exit of rental warehouse, but also free up budgetary resources “.

Read also Real estate: MPs differ on the issue of redirecting the loan with a zero rate (PTZ), even if increased


Towards the generalization of the tax on vacant apartments?

The same financial judges believe that the Vacant Housing Tax (TLV) could be “generalized” limit the artificiality of soils (ZAN). A journey that echoes that of the Association of Mayors of France (AMF) that it strives for “reorient some tax measures to finance additional costs and release land”. However, the list of municipalities that can subject taxpayers to TLV was already expanded by 2,000 municipalities up to 50,000 inhabitants on August 27 by a decree published in the Official Gazette.

Despite regular requests from private entities, the Court of Auditors also believes that the reduced VAT rate of 5.5% on energy renovations “does not address targeting and effectiveness issues” and advocates compliance with a mid-rate of 10%” could be searched for ».

“The overall logic that must motivate any housing tax reform is to shift the balance towards greater neutrality,” he argues.

Or property ownership taxation?

So, more polemically, he calls ” seek to tax possession more than acquisition » AND “consider moving from a transfer tax for consideration to an estate tax”, at no loss to the local authorities who collect these notary fees paid by all buyers when selling a property.

The owners are definitely in the sights of the “wise men” of rue Cambon, as the latter suggests “question” distinction “historic and unique in the world” between an empty tenancy and a furnished tenancy. How ? By removing the conditions “favorable” for classified tourist accommodation and “gradually unite” tax law around these two regimes.

Enough to give the government something to grind for. In mid-November, Prime Minister Elisabeth Borne officially tasked MPs Annaig Le Meur (Finistère, Renaissance) and Marina Ferrari (Savoie, MoDem) with taxing rents to “encourage long-term leases”.

Food for government

According to our information, this includes examining existing tax measures such as the Immovable Property Tax (IFI), transfer and inheritance taxation, but also examining the tax benefits associated with affordable housing with a view to facilitating and consolidating them.

At that time, the Minister of Housing authorized Gallery they want not only to deal with the case of furnished tourist accommodation, but also to succeed in bringing more individual and institutional investors into housing as their main residence.

“We want to ensure that owners who own 4-5 or more houses turn even more to long-term rentals. Therefore, these deputies will study the entire taxation of rents and not only the issue of tax reduction for taxpayers who opt for a “simplified” tax system,” Patrice Vergriete explained at the end of November.

Conduct a systematic review

Conclusions are expected by mid-March. Meanwhile, the Court of Auditors insists and signs: tax measures must be in line with the economic value of housing. Starting with limiting tax expenditures over time and conducting their systematic evaluation.

Also read Real estate: why PTZ refocusing and Pinel removal are being debated

As well as calling for targeted budget support as a substitute for tax incentives. In this regard, it recommends confirming the non-renewal of the Pinel device and the absence of an equivalent replacement device. Again, an idea that will not please everyone responsible in the field.