Are high taxes the reason for buoyant prices of real estate in France?

Taxation could be the explanation for the high price of real estate in France, according to a study published Tuesday, October 21 by the Federation of developers (FPI).

The REIT has asked the law firm Fidal to take a look at the tax burden on the construction and purchase of a home for €200,000.

The result: between VAT and transfer duties, both paid by the individual and indirect taxes borne by developers when building … tax accounts for 27% of the property value. This is 12.5 points higher than the average of the other countries studied (Germany, Belgium, Spain, Netherlands, Italy, UK). This is almost three times heavier than taxation in Germany.

“Our property tax is the highest in Europe and its evolution over the past ten years is a factor behind the rise in housing prices, ” said Francois Payelle, President of the REIT.

“When it was redesigned two years ago, we were promised that there would be no inflation. Two years later, the increases are between 30% and 60% depending on the community.”

The study also looked at individuals who purchase a buy to let property. If a lessor acquires the property for €200,000, leases for ten years and draws a rental income of 4% per year before the transfer, they will pay a total of €58,000 in tax (income tax, social security contributions & property tax). This is 32% more than in the UK and 45% more than Germany.