INSEE’s latest inflation forecasts now raise fears of a real surge in property tax and housing tax on second homes in 2023. As we indicated a few weeks ago, inflation for the month of next November will determine the coefficient of fixed revaluation of rental values, with the key to a sharp rise in local taxes next year.
November PHCI
Already this year, these cadastral rental values which form the basis of calculation for the property tax and the housing tax will be increased by +3.4%. This increase, which will soon be visible in the tax notices, in September for the property tax and in October for the housing tax, corresponds to the evolution of the harmonized consumer price index (ICPH) of November 2021 Since 2018, the year-on-year change in the ICPH recorded in November corresponds to the flat-rate revaluation coefficient of rental values for the following year.
Apart from the tax rates voted and applied by each municipality and department, this annual revaluation therefore leads to an increase in local taxes at least proportional to inflation. The final addition then depends on the possible evolution of the rates applied by the local authorities. For the property tax, it is the Marseille owners who will have the worst surprise this year: they will see the rate of their property tax increase by 13.1%. Tours (+11.6%), Strasbourg (+8.9%) and Nantes (+7.8%) will also see their rate increase.
Between 6.5% and 7% inflation this fall
The problem is that INSEE now estimates that inflation will continue to rise this summer, to stabilize in the fall between 6.5% and 7% over one year. Knowing that, by its calculation formula, the ICPH is higher than the consumer price index, the revaluation of rental values could therefore exceed 7% on the basis of the ICPH of November 2022. As every year, this increase will still have to be validated by the finance law for 2023 and we can therefore imagine that the government will make a move to moderate this exceptional inflationary impact. As with the project to cap the increase in the IRL at +3.5% for one year to protect tenants, the revaluation of rental values could be capped by taking an underlying inflation indicator as a reference.
PLF 2023
It would therefore remain to find the right balance, knowing that all owners are concerned this time (except in special cases of exemptions), whether on their main residence, their properties offered for rental and their secondary residences. In addition, this revaluation also concerns the tax for the removal of household waste which can weigh heavily in certain municipalities. We should soon know the government’s thoughts because the finance bill (PLF) for 2023 is being prepared in the summer before being presented at the start of the school year (generally around September 20) and being discussed during fall in front of deputies and senators.
| Source: Money&You | |||
|---|---|---|---|
| Property tax | Housing tax on the main residence | Housing tax on second homes | |
| 2017 | +0.4% | +0.4% | +0.4% |
| 2018 | +1.1% | +1.1% | +1.1% |
| 2019 | +2.2% | +2.2% | +2.2% |
| 2020 | +1.2% | +0.9% | +1.2% |
| 2021 | +0.2% | +0% | +0.2% |
| 2022 | +3.4% | +0% | +3.4% |
| 2023 | +7% without boost? | +0% | +7% without boost? |