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An annual local tax that is payable by property owners is about to increase. This increase, although inevitable, raises questions and concerns among taxpayers. To better understand the ins and outs of this measure, let’s analyze the causes and implications together!
The impact of the rise in real estate prices on this tax
Property tax plays a crucial role in financing municipalities and departments. It allows meet essential expenses for the proper functioning of territories. The calculation of this tax is based on the cadastral rental value of the property.
This value, the calculation of which is the responsibility of the tax services, then corresponds to the theoretical annual rent that the property could generate if it were rented out. Taxes take into account several criteria to establish this value, including the surface of the property.
The surface area increases to the same extent as the cadastral rental value. Furthermore, the geographical location of the propertyits accessibility and its immediate environment also influence its rental value.
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Also, a property in good condition and meeting current comfort standards will have a higher rental value than another that is dilapidated or dilapidated. The cadastral rental value is indexed to real estate market prices. And recently, these have seen a sharp increase. Which will not be without consequences on property tax!
A double penalty for owners
Bad news for property owners: the Property Tax (TF) will increase by 3,9 % in 2024. This new increase is in addition to the increases already experienced in 2022 and 2023. It then represents one of the most important of the last 40 years.
This increase can be explained by two main factors. On the one hand, there is the annual revaluation of cadastral rental values by the tax services. These values, which serve as the basis for calculating the property tax, are indexed to inflation. However, last year’s galloping inflation automatically led to an increase in cadastral rental values.
On the other hand, there is the increase in the TF rate voted by the municipalities. In addition to the national revaluation, municipalities also have the possibility of increasing their property tax rate. If they choose to do so, it will result in another increase for taxpayers on their tax bill.
The owners therefore find themselves faced with a double punishment. In fact, they are subject to both the increase in cadastral rental values and another increase in the municipal TF rate. This situation is putting a strain on the budgets of many households, for whom property tax represents a significant tax burden.
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Who are affected by the property tax increase?
In 2024, the increase in the Property Tax (TF) will affect 38 million French people, i.e. 57% of the population. This increase then represents an additional burden for French households, already weakened by galloping inflation. The final tax amount varies from one municipality to another.
Indeed, if the national revaluation is set at 3,9 %municipalities have the possibility of vote for an additional increase of their TF rate. This situation creates significant disparities between territories. This further penalizes taxpayers in municipalities that already have high property tax rates. One thing is certain, this increase risks discouraging potential property buyers!
