On July 4, the new Socialist French government announced that they would be targeting foreign holiday homeowners with increased taxes in a bid to reduce the country’s sizeable deficit budget.

Currently there are around 200,000 Britons who own holiday homes in France.
President Hollande has announced that tax on rental income is to increase from 20 per cent to 35.5 per cent, while capital gains tax on property sales is due to rise significantly from 19 per cent to 34.5 per cent. The increases in both cases have been labelled “social charges”.

A source within the UK Treasury commented on these developments stating that “we will of course challenge any proposal which breaches European single market laws and anti-discrimination rules”.

According to the proposed law, tax on rental income will be retrospective and backdated from January 1 2012. The increase in capital gains tax will be applied from the end of the July, effectively giving property owners no time to sell their homes and avoid the increased tax.

The increases in taxes are part of a wider plan to raise €7.2billion (£5.8bn) in order to meet a budget deficit target of 4.5 per cent. There are also plans to raise an additional €2.3bn by introducing a levy on those whose net wealth is €1.3million (£1million) or more.

The French finance ministry said the new rule would affect about 60,000 rental properties in France whose owners made an average profit of £12,000. There are an estimated total 360,000 non-resident second homeowners in France.

For details of properties for sale in France visit the French listings on Rightmove Overseas. One way to save money when buying in France, or moving there, is to use a currency exchange specialist when transferring your pounds into euros. For more information on this, visit the Currency Zone or contact Smart Currency Exchange.

To understand the full step-by-step process to buying a property in France, collect The Overseas Guides Company’s ‘France Property Buying Guide’