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Paris Is Tripling Its Tax on Second Homes

City hall hopes an added cost will free up more housing for full-time residents.

Philippe Roos/Flickr

Have you ever dreamed of owning a second home in Paris? Well, that dream is about to get a whole lot more expensive.

On January 30, Paris will triple its surtax on second homes, raising the extra charge paid by owners from 20 percent of the standard property tax up to 60 percent. As a result, people who own second homes in Paris will pay more than one and a half times the property taxes paid by people who either live in their homes or rent them out to full-time tenants.

The idea is to open up more housing for full-time occupants who actually make their lives in the city. Paris contains over 100,000 second homes, a large number for a city whose official limits contain just 1.1 million homes in total.

The idea of making second-home owners pay extra is nothing new. In 2015, France implemented the law requiring a 20 percent surcharge for any home that isn’t registered as someone’s primary residence. So far, that law is restricted to a long list of officially recognized “stressed zones” where affordable housing is in especially short supply. The exact final tax bill varies widely because property tax rates are set by local, not national authorities.

The 2015 law gave local authorities in stressed zones the option of raising the surtax as high as 60 percent. Paris, whose entire area is marked as a stressed zone, is the first municipality to do so—but possibly not the last.

But will the extremely high charge actually deter people from owning second homes? Paris could be in a win-win situation here. City estimates suggest that if all current second homes in the city remain as they are today, then city revenue will spike from €20 million to €63 million. Paris’ Housing Secretary Ian Brossat nonetheless insists that revenue “is not the first goal of the tax. The objective is to incite second-home owners to either sell up or to rent their properties to Parisians by the year.”

That’s a worthy goal for a city that has seen the number of second homes rise by 43 percent in 15 years. But even if this trend calms or is reversed, the average Parisian may still not notice much difference. Given the relative wealth of second-home owners, some will be too rich to care, while those that sell up may well be releasing luxury homes onto the market that will always remain beyond the means of most people.

There’s also a loophole: Airbnb. While Paris may soon require special permits for vacation apartments rented out for more than four months a year, a second-home owner could feasibly recoup the cost of the new tax by sub-letting their home for up to that length of time. If this happens, Paris City Hall will earn some extra cash, but Parisians won’t get a wider range of apartments to rent. Landlords may need to get a little cleverer about their investments, but they won’t necessarily have to sell them or find permanent tenants.

So the tax rise may not be enough. Indeed, the politician who first proposed the 2015 surtax law suggests that it might not truly change things until it actually reaches 100 percent, or double the tax for a permanently inhabited apartment. Creating such a huge difference in taxes might seem radical, but by tripling the current tax, it seems Paris City Hall is in the mood for something big.

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