Analyse of the occupancy home return by your French tax laywer

In general, homeowners are now required to declare the occupancy conditions of their homes for the first time this year (2023).

To comply with this new requirement, the administration has announced the opening of a dedicated online service for this declaration. This obligation stems from the 2020 finance law, which abolished the residence tax on primary residences from 2023 and established a new declaration requirement for homeowners (Law 2019-1479 of December 28, 2019, Article 16)

In accordance with Article 1418 of the French Tax Code (CGI), this obligation must be fulfilled before July 1, 2023. However, the administration announced in a press release dated January 23, 2023, that the declaration is now accessible online via the "Manage my real estate" service, and that a frequently asked questions (FAQ) dated January 19, 2023, has been published on the impots.gouv.fr website regarding this matter.

Our tax law firm presents the following important points:

Scope of the obligation

The purpose of the declaration is to allow the collection of the residence tax for second homes and furnished premises not used as the primary residence, as well as the tax on vacant properties. Homeowners are responsible for submitting this declaration, which concerns the nature of the occupancy and the identity of the occupants.

It should be noted that this declaration differs from the one required of landlords in the context of property valuation revisions, which may concern rents. This latter declaration was initially due to be submitted before July 1, 2023, but this date has been postponed to July 1, 2025, by the 2023 finance law.

The tax authority reminds all property owners, whether individuals or legal entities, that they must comply with this reporting obligation. It doesn't matter whether the property is located in France and the owner resides abroad, the declaration must still be completed. In case of joint ownership, only one declaration per property is required and only the last declaration submitted will be taken into account. In case of bare ownership, the usufructuary must complete the declaration. If the owner dies, another co-owner can make the declaration. If necessary, the notary may contact the competent tax service to update the occupancy while the estate is being settled. If the property is sold, the reporting obligation falls on the buyer, provided that the registration is effective and the property is visible in the secure space of the owner.

If the owner cannot fulfill his or her reporting obligation before June 30, the administration specifies that he or she must inform the administration via the secure messaging available on impots.gouv.fr.

However, it is important to note that the rules apply only to taxpayers who own the property on January 1 of the declaration year, the date on which the reporting obligation takes effect. They therefore do not apply in case of sale after January 1 but before July 1 of the declaration year.

Furthermore, according to the tax authority, the declaration concerns the owners of built-up properties used for residential or professional purposes subject to the residence tax.

Our tax law firm believes that owners of professional premises that are not used for residential purposes are not required to complete the reporting obligation and will not be penalized for non-declaration. Indeed, Article 1418 of the French Tax Code applies only to owners of built-up properties intended for housing, not to owners of professional premises.

Tax returns

The declaration concerns the nature of the occupation and the identity of the occupants.

Generally, Article 1418 of the French Tax Code (CGI) states that owners of residential properties must fill out a declaration specifying the nature of the occupancy of these properties, whether they reserve the enjoyment or the identity of the occupant(s) if the property is occupied by third parties as of January 1 of the tax year.

If the owner reserves the use of the property, they must indicate the title under which they occupy the property (primary or secondary residence) or specify if the property is vacant (unfurnished and unoccupied). On the other hand, if the property is occupied by third parties, the owner must provide the identity of the occupants, whether they hold a lease or occupy the property rent-free, excluding children.

It should be noted that the owner is required to declare the identity of their tenants, even if they have already provided this information in their property tax return. However, the administration plans to soon evolve this obligation to avoid redundancy of information for the owner.

As for seasonal rentals, the identity of the occupants is not required. If a person occupies a property without right or authorization (for example, by squatting, non-payment of rent, or refusal to vacate the premises), the owner must contact the DGFiP services. To do this, they must provide evidence through the secure messaging system of their personal or professional space on the impots.gouv.fr website.

Regarding the declaration procedures, Article 1418 of the French Tax Code generally provides that a declaration must be made before July 1 of each year. However, owners who have not made any changes to the information provided in their last declaration are exempt from this obligation. Thus, the first declaration must be made before June 30, 2023, and will only be renewed if changes in the situation occur.

In derogation from the general rule, Article 1418 of the French Tax Code provides that owners whose primary residence does not have internet access, as well as those who are unable to submit their declaration electronically, may use other means made available to them by the administration. However, the administration does not offer a paper declaration form of the Cerfa type. It indicates that owners who cannot make their declaration online must contact the tax authorities through the France Services network, contact centers, or the competent individual tax office for the property concerned.

The "Real Estate" service offers two options for online declaration by owners of numerous residential properties: a guided path to make a declaration for each property by grouping several properties occupied by the same occupants, or an exchange of files in CSV format to group all the owner's properties into a single declaration. This option is mandatory for owners of more than 200 properties (large accounts, including social housing landlords) and is possible for owners of fewer than 200 properties.

Our tax law firm estimates that, for social landlords, this new declaratory obligation replaces the prior obligation to transmit digital information on rented properties and their occupants before February 1 of each year under Article L102 AE of the French Tax Procedures Code.

However, this new obligation does not replace other paper declarations that managers of housing facilities, university residences, or nursing homes may be required to submit to qualify for a tax exemption or reduction.

Penalties

The administration emphasizes that the declaration obligation is subject to a penalty.

Under Article 1770 terdecies of the French Tax Code, failure to declare, as well as omission or inaccuracy of the information provided, may result in a tax fine of €150 per property. The text specifies that the fine is not due if another higher fine or penalty is applied for the same facts.

Our tax lawyer firm informs you that sanctions should only apply if, by July 1st, the implementing decree provided for in article 1418 of the French Tax Code has been published. Otherwise, the mandatory nature of the declaration could be contested, given that the entry into force of legislative provisions requiring implementing measures is postponed to the date of entry into force of these measures, in accordance with article 1 of the Civil Code.