Tax D'habitation and Fonciere for Gites

[Erica]

Dear All,

I'm currently working out a business plan to see if running gites in France (Dordogne) is going to be viable. I already have an up and running business as a children's book author & Illustrator which I can transfer to France so the gites will be a supplementary income. However the cost of the tax d'habitation & fonciere is concerning me as I've heard of extremely high rates - 6000 euros for three gites and a residence! Are there any gite owners out there who would be willing to share how much the above taxes cost them per annum so I can make a rough estimate as to how much I will have to fork out? Please do private message me if you would prefer to keep the conversation private.

Thank-you in advance for any help or advice available

Erica

[EuroTrash]

The rates are set by each commune. Therefore two identical properties in different communes are likely to have vastly different property taxes. One could easily be three or four times higher than the other.

As a general rule, the more prosperous the commune, the more businesses and taxpayers it has on its books paying property taxes, the less work that needs doing on its infrastructure and the less indebted it is, the lower the rates. It's all about balancing the commune's books once the annual budget has been set.

[Chancer]

That sounds reasonable for what is effectively 3 seperate properties in their own right. Indeed many people run seperate gîtes in different locations from their own dwelling so €2K each dependant on their size is reasonable, remember gîtes will have all the confort, heating, en suite bathrooms etc that increase the taxes

 

You need to think outside of the box, someone letting out 5 spare bedrooms as CDH will not pay a penny more in taxes than if they were used by their family and standing empty, thats because its location à la saisonnière and the theory being that outside of the rental period the rooms return to the use and enjoyment (jouissance) of the owner and their family, in practice they can be let 52 weeks a year but the TDH and TF remain unchanged.

 

If you have the right complew where the accomodations (I am deliberately not calling the gîtes) are in the same building, adjacent or connected, share the same entrance or at the least you can claim they are then they will not be rated as seperate properties but as the spare bedrooms as above in the CDH example.

I have had several negotiations on this very subject with the hôtel des impôts where they wanted to rate all of my rental apartments as seperate dwellings, I stuck to my guns and for the moment all is fine, I did however re-open up a doorway that I had previously blocked up so that my apartment now has a communication with the main building, if need be I could block up my entrance door from the rear courtyard so that I have to use the main entrance door to the communal staircase to all the apartments including mine.

 

It goes without saying that you need to live on site, preferably or arguably within the same building and that it is your residence principale on paper at least if not in practice.

[Erica]

I honestly don't know what I would do with out you two helping me! I really do appreciate it very much. I haven't bought anywhere yet - I'm renting for a year while I look around and see if French life suits my family. We are planning 2/3 gites on site with a max of two bedrooms each, no pool and the commune will hopefully be 24310.

Thanks again for the info :-)

[Chancer]

Its one thing to find the property fo your dreams and/or the place that you have an overwhelming urge to renovate then to think how can I make this pay? Thats how most people end up running gîtes but you have a free choice.

 

Why restrict yourself to a very finite short rental season, to probably a reduced fiscal abattement and to all the cleaning and housekeeping that gîtes involve especially when you will have very high fixed costs to be amortised over a short rental season?

 

I am not claiming any credit for my success just good luck and perhaps a good gut feeling instinct, I just wanted to get waway from the UK and renovate the place, it was maybe 8 years before I gave any thought to how to exploit the place and 10 years before starting down completely the wrong track to finally fall on the right path a year ago.

 

Were I to do it again with the benefit of hindsight I would look to do exactly what I am doing now, an Apparthôtel but in an even better demographic area.

 

I would not touch a gîte complex with a barge pole.

 

Look at where the chain Apparthôtels have sprung up, look at their rates, try and find a similar place that has both business and tourist trade, I have an all year round season and after just 6 months of doing short term rentals my occupancy never dropped beneath 95%, March was at 100% and this month will be 120% (yes I know that is impossible).

 

Look also where there are several cheap chain hôtels in the ZACs and around the rocades, by differentiation having a more desirable location, having the quality and the personal touch that is sadly lacking in such places people will pay a premium for your establishment, business travellers could pay as little as €39 a night around here at an F1 etc, local hôtels are from €90 per night and poor value for sub-standard accomodation so they are really pleased to stay at my place for €80 but at this time of year they are squeezed out by families paying €120 per night.

 

At first I really struggled to explain the Apparthôtel concept, the regional paper even ran a story on it as if it were something really outlandish, business travellers that had worked overseas got it and now they are recommending it to colleagues and word is spreading.

[suein56]

[quote user="Chancer"]

At first I really struggled to explain the Apparthôtel concept ...

[/quote]

That I find really strange as OH and I, plus son who lives in the UK, shared 4 aparthotel rentals in 2002 in and around Bordeaux, Cap Ferret (not Cap Ferrat !), Arcachon and near Pyla-sur-Mer, so the idea really is not at all new.

You keep saying how behind the times your area is ... I am beginning to see it really is.

Plus your point about gites as separate buildings being expensive tax-wise is so true. When you think that taxe d'hab and fonc here are both partially accessed on how many bathrooms/wcs with handbasins etc there are in a property - so called 'luxury' installations - it is no wonder the French don't do ensuites in the same number as in the UK. 

We have some English friends who are trying to sell their beautiful, gloriously modern house by the sea. It is beautifully presented, perfect in every detail. They have had lots and lots of viewings in the 5 months it has been on sale but the potential purchasers (all French) baulk at the 3 en-suite bedrooms and mutter darkly when told the property taxes.

Sue

[Erica]

that's really interesting, to hear it form your hindsight's perspective. I must admit I'd not heard of an apparthotel before just now - I'll look into it. I imagine the areas around Bordeaux might be more suitable for an apparthotel...perhaps not so much where we're wanting to be based, in the Dordogne but like I said it's an interesting concept an certainly something I'll look into so thank-you.

The gite business is really only a supplement for my writing and illustration so it only has to be viable/enjoyable and 3-4 months per year. I have a long term plan to host crafting workshop holidays which would be much more niche and perhaps a little more lucrative. Bearing in mind what you mentioned earlier about avoiding, or at least trying to avoid a large foncier bill I'll consider whether the property I buy can be classed as "one property", with "extra bedrooms". With Crafting workshop holidays the guests, (in groups of six) would be more like house guests rather than accommodating themselves in a gite so that might be a long term better option for the future...do you think?

[EuroTrash]

Here's a comparison of taxe d'habitation between the various communes in and around that post code

http://www.proxiti.info/taxe-habitation.php?o=24064&n=Brant%C3%B4me

[Erica]

"Plus your point about gites as separate buildings being expensive tax-wise is so true. When you think that taxe d'hab and fonc here are both partially accessed on how many bathrooms/wcs with handbasins etc there are in a property - so called 'luxury' installations - it is no wonder the French don't do ensuites in the same number as in the UK. 

We have some English friends who are trying to sell their beautiful, gloriously modern house by the sea. It is beautifully presented, perfect in every detail. They have had lots and lots of viewings in the 5 months it has been on sale but the potential purchasers (all French) baulk at the 3 en-suite bedrooms and mutter darkly when told the property taxes."

This really is eye opening info...thank-you.

[suein56]

[quote user="suein56"]When you think that taxe d'hab and fonc here are

both partially accessed on how many bathrooms/wcs with handbasins etc

there are in a property - so called 'luxury' installations - it is no

wonder the French don't do ensuites in the same number as in the UK. 

[/quote]

Gosh, so sorry but when I wrote : When you think that taxe d'hab and fonc here are both partially accessed on how many bathrooms/wcs : I was still in talking-to-Sosh-about-quitting-Orange mode for a close friend. What I meant was :

When you think that taxe d'hab and fonc here are both partially assessed on how many bathrooms/wcs ...

That's what I meant to say; apologies.

Sue

[Chancer]

[quote user="suein56"]

That I find really strange as OH and I, plus son who lives in the UK, shared 4 aparthotel rentals in 2002 in and around Bordeaux, Cap Ferret (not Cap Ferrat !), Arcachon and near Pyla-sur-Mer, so the idea really is not at all new.

You keep saying how behind the times your area is ... I am beginning to see it really is.

Sue

[/quote]

 

The people that travel here by plane/train plus hire car from the more enlightened areas or from the grand villes understand, its not alien to them, its when I get people phoning up asking the price of une chambre or une shammbrah if they are from Toulouse where I have a real problem explaining, yet there is a multi-storey Apparthôtel right by the Toulouse Airbus factory where these guys are coming from to work in our one, not only that its half the price, the rental prices are really crazy here.

Searching for the  e-mail address of the journaliste today (as I have a scoop for her) I came across her first contact with me in August 2014, here is what she said:

Je suis journaliste au Courrier picard, et j'ai découvert hier le ***********.
Comme c'est un concept nouveau sur le secteur, j'aimerai vous rencontrer pour écrire un article à ce sujet.

 

[alittlebitfrench]

Erica wrote...

"I'm currently working out a business plan to see if running gites in France (Dordogne) is going to be viable"

In Chancers case it is viable as he is right opposite Airbus. Gîtes can generate a viable income but only in places that can generate business all year round from a mixture of clients. Business travellers, tourists, weddings, meeting family ect. In fact business clients are the best, tourists are the worse IMHO. There is a couple of gîtes around the corner from me and they are always full with business types. But like where Chancer lives, not many expats would want to live here. It is too France. Moreover, a place here that has 3 gîtes will at cost least 800 k.

A gîte in the Dordogne (and there are thousands of them) is really not going to provide you with a stable/reliable income. Or maybe no income. The amount of money (purchase price, insurance, taxes, running costs) will never pay itself back. You will probably lose money.

A house with 3 gîtes is going cost upwards of 400 k Euros. A normal house is going to cost lets say 250 k. Personally I can think of better ways of investing 150 K.

My advice is don't do it or if you do think of a better location but also think about the opportunity cost. Buying a house and a flat to rent out is a far better proposition.

[suein56]

alittlebitfrench wrote : Buying a house and a flat to rent out is a far better proposition.

Do you mean a rental à l'année as opposed to a seasonal let ? Potentially a sound idea.

Otherwise some French friends rent out seasonally a small flat very close to the port in Vannes. As they live within half an hour's drive of there they manage the changeovers themselves. They do very well. Running costs are v reasonable as Vannes is booming.

Plus the season can be longer there with many couples just wanting a few days away in a pleasant place with plenty to occupy them if they want it or where they can simply sit and watch the world go about its business.

Sue

[Chancer]

There are gîtes around here but the owners are stuck in the past, they get a few weeks rental maximum a year from (usually French) guests who are equally stuck in the past.

Their places are decorated, furnished and cleaned like something out of the bad bad old days or a horror movie but its not that which stops them getting rentals, its sticking rigidly to the unwritten "rules" of how things should be done.

Minimum rental 1 week and this has to be Saturday to Saturday

A ridiculously long contrat must be signed, a cheque de caution and an acompte must be paid both of which will be cashed just to reserve the stay.

Guests must have an insurance cerificate covering them to stay in the gîte which rules out all foreigners.

Guests must arrive within a 2 hour window on Saturday afternoon and a long and laborious inspection and signing of an état de lieu must be done 

Guests must leave promptly at 9am on the following Saturday morning but only after doing an equally long exit inspection, if they do their own cleaning they will have to be up at 6am.

Guests must bring all their own bedding and towels including quilts and duvets (try doing that on easi-jet) as well as soap, shower gel, shampoo, washing up liquid etc.

 

Guests must pay a large cleaning forfait or get up early to do it all themselves and with the méchanceté of the people around here they will still find the equivalent of the forfait deducted from their caution which they will have to wait 3 months to recieve. 

There are plenty of others that I have forgotten.

 

Now the above may work on the côte D'azur or the door dog knee in July and August but here we have an all year round tourist and business traveller season but the average stay is one or two nights and I can constat that is true for 99% of bookings, so the gîte owners are only catering to 1% of the demand, in fact much less than that for a weeks stay, their prices are really only attractive for a large group or family but even then its all the hoops that they have to jump through which sends them to the hôtels and the CDH's.

business people stay one and occasionally 2 nights, they want somewhere clean and comfortable with no fuss, to arrive, do some work in the evening, have a shower and a coffee in the morning and off to their first appointment, most dont even want to speak with me to return the key, they leave it in the room or in the letter box.

Tourists very similar, they will arrive when they arrive, after a long drive from say Leeds and then a ferry crossing their is no way they can be precise anyway, often people will request to arrive at midnight or the early hours of the morning, I am happy with this if negotiated, I greet them, the children are already asleep in their arms, they pay the money and are gone the next morning leaving no trace of their presence other than beds to be changed.

Tourists will stay one or two nights often as part of a multi stop battlefield trip, Ypres, Somme and Normandie, many others use this area just as a stop over on their way to or returning from Normandy, Brittany or the South, these include many Dutch, Belgians and Germans.