Buying a house in France? Watch out for desperate governments

If you're thinking of buying a house in France, beware. 'Wealthy foreigners' are getting stung with a new property tax.

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'Wealthy foreigners' beware.

A few years ago, when house prices in the likes of Spain, France and Portugal were beginning to look remarkably cheap, I said that while it all looked very tempting indeed, anyone wanting to buy a holiday home should proceed with some caution.

Why? Taxes. Desperate governments tax things that can't move. Things such as houses. And the easiest houses to tax are houses belonging to foreigners. No surprise then that President Hollande's government yesterday had a go at "wealthy foreigners".

This isn't the first time a few years ago France raised the capital gains tax on the sale of second homes. This time, however, the new tax is not triggered by selling a home but by owning an empty one.

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France has an equivalent of our council tax the taxe habitation and the idea, says finance minister Michel Sapin, is to add a surcharge to this payable in areas where "demand far outweighs supply". That doesn't include many rural areas, but does include Paris, Toulouse, Lyon and a variety of seaside areas such as Nice (the Telegraph estimates this will take in about 10,000 British owners).

Right now, the suggested level of surcharge is low according to Les Echos it will come to a mere €90 extra a year in Paris. But, as ever these days, the direction of travel is clear.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.