Posted on Nov 23, 2023 at 6:04 am by James T
The average rate of increase in property tax in 2023 is 7.1%, a considerable and unprecedented rise. This increase has consequences for the payment method of many French property owners.
Faced with this unprecedented situation, the General Directorate of Public Finances (DGFiP) has been forced to modify the monthly payment schedules for the year 2023. Instead of the traditional 10 monthly installments planned each year, taxpayers will now pay their local taxes in 11 or even 12 monthly installments.
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The elimination of the residence tax increases local tax pressure
This substantial increase in property tax is partly explained by the elimination of the residence tax, as desired by the government. This decision has deprived local authorities of an important source of revenue, prompting them to increase other local taxes, including property tax.
In some municipalities, property tax has even experienced spectacular increases of over 10%. The gradual elimination of the residence tax for primary residences has therefore had an impact on local taxation, resulting in increased tax pressure for many property owners.
Why did seven million French people have to pay property tax again on November 15th?
On November 15th, in France, approximately seven million property owners had to pay property tax again due to a considerable increase in several municipalities. For this year, the collection of this tax was spread over 11 or 12 months instead of the usual 10 monthly installments, in order to compensate for this increase.
Property owners who chose monthly payments saw their deductions continue until October, based on the amount of the 2022 tax. A regularization was therefore necessary in November, or even December, to adjust the amount to the actual increase in the tax for the current year.
What changes for taxpayers?
The increase in property tax affects taxpayers differently depending on their payment method:
- Monthly payment: Property owners who have opted for monthly deductions will see their installments spread over 11 or 12 months instead of 10. They will continue to be deducted each month, but the amounts will be reassessed based on the increase in property tax.
- One-time payment: For those who choose to pay their property tax in one lump sum, the increase has been directly taken into account during payment. These property owners are not affected by the changes in payment schedules.
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Concrete example:
If your property tax was €1000 in 2022 and it increased by 7% this year, you would have been deducted €100 per month between January and October, and then €70 in November to cover this increase.
Return to normal expected in 2024?
The DGFiP had anticipated these changes when it sent out the property tax assessment notices for 2023 at the end of summer. It had then detailed the new schedule for the affected taxpayers.
If no other significant increase is announced in 2024, the situation should return to normal in January, with monthly installments indexed this time on the correct amount of property tax.
The significant increase in property tax in 2023, linked in particular to the elimination of the residence tax, forces many property owners to review their payment habits and encourages local authorities to seek new sources of funding. Taxpayers must therefore adapt to the new monthly payment schedules, while remaining attentive to any tax developments that may occur in the coming years.
