No sooner have the 2022 property tax notices been received than the concerns of a surge in the bill for 2023 are topical. As we had already warned for several months, the sharp rise in inflation will automatically have repercussions on local taxes in 2023 because the evolution of the harmonized consumer price index (ICPH) for November 2022 will determine the next coefficient of fixed revaluation of the rental values.
November PHCI
Already this year, these cadastral rental values, which form the basis of calculation for property tax and housing tax, have been increased by +3.4% after only +0.2% in 2021. This increase corresponds to the evolution of the harmonized consumer price index (ICPH) for November 2021. Since 2018, the annual shift of the ICPH observed in November corresponds to the flat-rate revaluation coefficient of rental values for the following year .
The final addition then depends on the possible evolution of the rates applied by the local authorities. For the property tax in the big cities, it is the Marseille owners who have the worst surprise this year with a property tax rate increasing by 13.1%. Tours (+11.6%), Strasbourg (+8.9%) and Nantes (+7.8%) also saw their rate increase.
Inflation will rise again this fall
Today, therefore, it is this fall’s inflation that is worrying. INSEE predicts a peak at the end of the year with an estimate of +6.3% for the November consumer price index. Knowing that by its calculation formula, the ICPH is higher than the consumer price index, one can easily imagine that the revaluation of rental values will be close to 7% on the basis of the November 2022 ICPH. Already for the month of August, the ICPH has just been reassessed at 6.6%.
Pressure from local communities
As every year, this increase will have to be validated by the finance law for 2023. The government has so far remained very discreet on the subject and even seems to have promised local authorities, for which property tax is a major resource, not to not cap this increase.
Without hoping for a specific shield for owners, we can still imagine a gesture to moderate this exceptional inflationary impact. There is indeed no logic in passing on current skids in energy or food costs to the rental value of housing. As with the “rental shield” allowing the increase in the IRL to be capped at +3.5% for one year to protect tenants, the revaluation of rental values could be limited by taking as a reference an inflation indicator under- underlying.
Beginning of the debates on October 10 for the 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 rent or their second homes. In addition, this revaluation also concerns the tax for the removal of household waste which can weigh heavily in certain municipalities.
The finance bill (PLF) for 2023 should be presented to the Council of Ministers on Monday, September 26 before being tabled with the National Assembly no later than October 4. The discussions of the text before the deputies will begin on Monday, October 10 and we can of course expect a heated debate on this subject.
| 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 cap? | +0% | +7% without cap? |