The burden on property owners is getting heavier and heavier (1/3)

The real estate owner is not privileged, but rather a duck that is increasingly overtaxed. The Research Institute for Economic and Fiscal Research (IREF) recently published an interesting study on the actual value of real estate for owners. The authors, Jean-Philippe Delsol and Pierre Garello, argue that politicians in France like "neither owners nor real estate". In their opinion, this is probably because property makes one independent, and the state prefers those who depend on it! Contrary to the common image, the property owner is not privileged. Rather, it's a duck that is increasingly overtaxed. The taxes that are levied on property owners are actually "heavier,'''than those levied on other types of assets and income', and ever-expanding regulation 'continually undermines the value of real estate and therefore its profitability'." But before we examine the landlord's situation in detail, let's take a brief look at the real estate market.

An imbalanced real estate market

Construction professionals have been drawing attention for months now to the worrying state of their industry. The French Building Federation (FFB) reported earlier this year that the market for detached homes will decline by 31.3% in 2022. The press release noted that with 96,000 gross sales, 2022 was "the worst year in the last 16 years." A total of 71,000 fewer residential units were built last year than in''2021. The situation did not improve in 2023. In July, the Federation announced that new home sales were down more than 38% for the year. The Federation president predicts 150,000 people in the construction industry will be laid off by 2025. That number could rise to 300,000, given the impact on related industries such as real estate or design offices. But the poor state of the French real estate market has not emerged today, mainly because it has been the plaything of politicians of all stripes for years. The IREF study cites several figures that give a better understanding of the problem.

The two authors of the study offer several simulations to better understand the owner-lessee situation. They cite "the case of an owner who receives rental income from a building worth €500,000, the rent is 5% of the value before deducting rent payments, i.e. €25,000 per year". Dirty''The owner's rental income is reduced by property tax and various utilities not included in the tenant's bill, amounting to 18% of the rent, i.e. a net pre-tax rental income of €20,500. The landlord's tax burden will vary depending on his legal and tax position.

Three scenarios are considered:

• The landlord owns the property through a tax-exempt limited liability company in which he is the sole partner. He has other significant income and is subject to property tax in the highest bracket of 1.5%. In favor of income, CSG and related taxes at a rate of 17.2%, he is subject to net income tax of