a report calls for lowering notary fees and reforming tax loopholes

Tax advantages not sufficiently evaluated, disincentivizing notary fees: the Council of Compulsory Deductions called on Monday in a report to reform real estate taxation, which it accuses of “rigidifying” the market and lacking “coherence”.

This council attached to the Court of Auditors wants to tackle both taxes, such as transfer taxes during transactions, as well as the numerous tax aids, such as the Duflot and Pinel systems or the reduction on income tax which can benefit owners of furnished rentals.

The Council for Compulsory Deductions (CPO) wants this reduction, which can reach 50% or even 71% of the rents collected, either aligned with the rental regime for bare property, 30%. The first president of the Court of Auditors Pierre Moscovici, who chairs the CPO, also believes that the reduced VAT rate of 5.5% on energy renovation is not a good instrument. and wishes to increase it to 10%, by redirecting financial gains towards more targeted aid.

Taxes with counterproductive effects?

Concerning taxes, the Council accuses some of them of having counterproductive effects and of contributing, even modestly, to price inflation. The report recommends switching the portion of taxes that are currently paid at the time of acquisition – they represent around 40% of tax revenue from housing – to those paid at the time of ownership, in order to tax the rent more than access to property, explains Pierre Moscovici.

Particularly targeted are the transfer rights for onerous reasons, wrongly called notary fees. Settled at the time of a real estate purchase, they represent around 5% of the purchase price and actually go to the departments and municipalities. Their effects on residential mobility are generally negative, estimates the CPO, disincentivizing purchases.

She recommends shift part of their amount towards land tax, so that their removal costs nothing to communities. In 2020, housing taxation represented 92 billion euros according to Council calculations, or 8% of the total compulsory levies.