Hailed as the end to affordable accommodation in France, a new law for homeowners who rent out their properties for seasonal lets means they will be taxed more for the privilege, with holiday homes now being classed as business assets.
The Loi Duflot has caused much confusion and debate since being introduced, initially in Paris, to combat a housing shortage for locals in areas where demand outstrips supply for affordable housing. It is expected, however, that the new tax for holiday lets will simply be passed on by owners to renters of all types of holiday homes in France.
Owners are legally obliged to apply to change the designation of their property from a “Habitation” to a “Location Meublée Court Durée” if they are renting out on a short-term basis (more than 90 days per year). This means that second or holiday homes will become “business assets” to be inspected for quality and compliance by the local mayor’s office.
The local economy and property market determines whether or not mayors exercise their rights to veto this law. However, most have adopted the amendments swiftly. Some municipalities, such as Paris and Nice, have helped holiday let owners conform to the new law as quickly as possible by requiring them to ask for a temporary two year, renewable change of use permit.
What’s the penalty for not re-designating your holiday rental property?
The maximum penalty is a hefty €25,000 plus a judicial penalty of €1,000 per day until your property is re-designated. Alternatively, you could avoid the tax altogether by choosing to let your property long term, either furnished or unfurnished.
Due to the complexities of this new law, introduced in 2014, it is advisable to consult a French property lawyer for further details.