Housing Tax Reform: What changes in 2022?

In 2022, the payment criteria for the housing tax—one of the most dreaded taxes in France—are changing once again. Some say the tax has been abolished, others that the amount to be paid will be lower, and still others believe it is increasing. Where does the truth lie? In reality, there is some truth in each of these perspectives; it all depends on your situation. Let’s clear things up and decode this new housing tax reform.

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Reminder: What is the housing tax?

The housing tax is a local tax and applies to everyone who rents or owns a furnished property intended for residential use. In other words, the tax concerns all owners and tenants. All occupants of a private residence are taken into account for the housing tax.

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The housing tax is determined based on the residence occupied on January 1st of the year for which the tax is paid, as well as the household's tax situation on that same date. If you move during the year, the address of your residence on January 1st is the one used to calculate the tax.

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The criteria taken into account to determine the amount of the housing tax are:

• The residence itself The location of the residence The household's professional situation (income, household composition, taxes, etc.)

Many people forget this, but the housing tax also includes the outbuildings of a residence, whether they are attached or not. This includes private parking spaces, garages, etc.

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What does the housing tax reform consist of?

It was announced at the launch of the housing tax that it would evolve in different ways each year. Indeed, we have seen various changes since 2018. After a 30% reduction in 2018 and then a 65% reduction in 2019, the housing tax was abolished in 2020 for 80% of tax households. In 2021, the 20% of households that still had to pay it benefited from a further 30% reduction.

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With the deadline for paying the housing tax just a few weeks away, it is time to find out what is new for the 2022 tax. Who is affected? How is it calculated? Given that the goal is for no household to pay it for their primary residence by 2023, let’s see how its gradual abolition is continuing.

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In this new reform, there are two distinct scenarios that benefit taxpayers: exemption and gradual abolition. But what are the criteria to qualify?

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Who can benefit from an exemption?

Partial or total exemption from the housing tax concerns tax households that do not already benefit from the gradual abolition of the tax on their primary residence. The amount of the exemption depends on their 2021 tax situation, the household's taxable income, and all occupants of the dwelling. In this case, the exemption will be 65% for the primary residence, regardless of the reference taxable income.

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Thus, if you benefited from a partial exemption from the housing tax in 2021, if your taxable income does not exceed certain amounts, and if you were not subject to wealth tax in 2020, then an automatic partial exemption is applied to the amount of housing tax to be paid in 2022.

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Furthermore, people over 60, widows and widowers, and people living in retirement homes can also claim a total or partial exemption from the housing tax if they meet certain conditions. They must not be benefiting from the gradual abolition, their income must not exceed certain thresholds, or they must be living in specific situations (single, as a couple, with a dependent, etc.).

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In what cases can one benefit from a gradual abolition?

The other scenario that benefits taxpayers is the gradual abolition of the housing tax implemented since 2018. Here again, it concerns certain tax households and depends on reference income as well as household composition. To find out if you benefit from the abolition in 2022, it depends on your situation in 2021:

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• If you benefited from an exemption from the housing tax in 2021, if your taxable income does not exceed certain amounts, and if you are not subject to wealth tax, then you have no housing tax to pay in 2022.

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• If you enjoyed a 30% reduction in your housing tax in 2021, if your taxable income exceeds certain amounts, and if you are subject to wealth tax, then you benefit from a 65% abatement on the tax in 2022.

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You can find out if you are eligible for the gradual abolition of the tax in 2022 using a free online simulator. In short, as it is closely linked to wealth tax, it is essentially wealthier households that will pay the housing tax in 2022.

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When is the 2022 housing tax due?

The housing tax schedule happens in two stages. First, you receive your tax notice, and then, some time later, you must pay the amount indicated on the notice.

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For those who have chosen to handle everything online, your tax notice will be available starting September 28 for non-monthly payers in your personal account. For monthly payers, it will be available for viewing starting October 19. Once it is online, you will also receive an email notifying you that your tax notice is available in your account.

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The tax must be paid three weeks after receiving the notice. Therefore, for 2022, the housing tax must be paid online by midnight on November 15. The bank withdrawal for the amount will take place on November 25.

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For those who have chosen the paper option, tax notices will be delivered by mail throughout October, with the same payment deadline. There is no need to file a return for the housing tax to receive your notice; everything is automated.

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Does the housing tax also apply to secondary residences?

Secondary residences are also subject to the housing tax but do not benefit from the same advantages as primary residences. Indeed, even if you are exempt from the housing tax or benefit from the gradual phase-out for your primary residence, the same reduction system does not apply to secondary residences.

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On the contrary, the housing tax for secondary residences can even be increased in certain cities with high pressure on the real estate market. Furthermore, there are no plans to abolish the housing tax for secondary residences in 2023, as is the case for primary residences.

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For owners looking to optimize their income by renting out their secondary residence and thus offset the cost of the housing tax, seasonal rental is an attractive solution. It is proven that short-term rental of a secondary residence generates attractive rental income that is much higher than long-term rental. At Welkeys, we take full charge of your property to offer high-end stays to travelers and make your listing attractive on rental platforms.

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