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New home property tax: principle and exemption

Principle of subject to property tax

Anyone who owns or will use a home on January 1, be it a house or an apartment, is subject to property tax on built properties. Property tax must be paid when the accommodation is fixed to the ground and cannot be moved, in particular:

  • houses or apartments;
  • commercial, industrial or professional buildings;
  • land for commercial or industrial use;
  • boats used in a fixed point and equipped for housing, commerce or industry.

>> Read also – Property tax: definition, calculation and exemption

The law provides for relative total or partial exemptions, in particular:

  • new homes, reconstructions or additions to the construction of a building for residential use;
  • new homes, reconstructions or additions to the construction of a building other than for residential use;
  • homes that have undergone energy saving work;
  • Housing with a high level of energy efficiency.

Property tax exemption for new real estate

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One of the main advantages of new buildings is the temporary exemption from property tax when buying a new building or buying off-plan (Vefa).

The exemption is valid for a period of 2 years from the completion of work on new construction, reconstruction or additions to construction. The exemption begins to apply on January 1 after the completion of construction.

Note: the execution of the work does not imply that the following works have been carried out: heating, exterior or interior painting or even wall coverings.

The property tax exemption applies to departmental, municipal and inter-municipal actions. The property tax exemption only applies if the new home is the owner’s primary or secondary residence and the property is owner-occupied or tenant-occupied.

Note: The municipality or intercommunity establishment may decide to deliberately remove this exemption or limit it only to homes financed with state-subsidized loans such as contract loans, zero-interest loans, or even subsidized loans.

Formalism

To benefit from the property tax exemption on new homes or apartments, taxes must be reported as soon as the work is completed and within 90 days after completion. In the absence of a declaration to the public finance center of the location of the property, the exemption will only apply for the remaining period to run after December 31 of the following year. To make this declaration, form H1 for single-family homes or H2 for apartments must be completed.

Specific property tax exemptions for certain new buildings

Under certain conditions, other new homes are also exempt from property tax, this is the case in particular:

  • new homes completed as of January 1, 2009 and whose general energy performance level exceeds certain amounts established by law for a period of 5 years;
  • buildings belonging to young innovative companies for a period of 7 years;
  • new homes covered by a rental-purchase contract for a period of 15 years.

>> Our service – Discover all the new housing and tax exemption programs currently for sale in France

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