New French Tax on Vacant Residential Property: What Changes from 2027

From the taxes levied for 2027 onwards, France's annual tax on vacant dwellings (taxe sur les logements vacants, or TLV) and its residence tax on vacant dwellings (taxe d'habitation sur les logements vacants, or THLV) will be merged into a single tax: the tax on vacant residential property (taxe sur la vacance des locaux d'habitation), set out in Article 1406 bis of the French Tax Code.

The new regime keeps a distinction based on where the property is located, but allows for significantly higher rates. Owners of unoccupied dwellings should review the status of their property, and the vacancy period already accrued, well before the reform takes effect.

Key Takeaways

• The TLV and THLV are merged into a single tax from 2027.
• The distinction between tight rental markets (automatic application) and other areas (application by local council resolution) is preserved.
• Rates may reach 60% in tight rental markets from the second year of vacancy, and 50% elsewhere.
• Vacancy accrued before 1 January 2027 counts — the clock is not reset when the reform comes into force.
• Property owners should anticipate: check the property's rental value, reconstruct the vacancy period, and update the occupancy return required by Article 1418 of the French Tax Code.

A Single Regime from 2027

The new tax broadly mirrors the two taxes it replaces. Its application, however, depends on the municipality in which the property is located.

Tight rental markets (zones tendues)

Areas outside tight rental markets

The list of 3,689 municipalities subject to the tax as of right is set out in the annex to Decree No. 2026-831 of 25 August 2026 (available on Légifrance).

For 2027, the vacancy period accrued before 1 January 2027 will be taken into account. In other words, the reform does not reset the vacancy clock.

A Tax Calculated on Rental Value

The tax will be levied on the rental value used for the second-home residence tax (taxe d'habitation sur les résidences secondaires, or THRS).

It will be payable by whoever has held the property since the start of the vacancy period: the owner, usufructuary, building-lease tenant, rehabilitation lessee, or emphytéote (long-term ground-lease tenant).

The amount payable may vary significantly depending on the municipality and the length of vacancy:

• In tight rental markets, the standard rates of 17% and 34% may be raised, by local council resolution, to 30% in year 1 and 60% from year 2.
• Outside tight rental markets, the locally-set rate cannot exceed 50%.

Properties Falling Outside the Scope

Article 1406 bis of the French Tax Code expressly excludes:

• properties occupied for more than 90 consecutive days during the reference period;
• properties whose vacancy is beyond the taxpayer's control;
• properties that are outbuildings of the public domain;
• certain properties held by social housing bodies.

Vacancy beyond the taxpayer's control must be evidenced by concrete elements. Under the guidance applicable to the current TLV, this typically covers properties genuinely offered for sale or rent at market price without finding a buyer or tenant. It is prudent to keep sale and lease mandates, advertisements, correspondence with agents, evidence of asking prices, and works quotes.

A Definition of "Vacant Dwelling" Still to Be Clarified

Article 1406 bis does not precisely define what constitutes a vacant dwelling. Pending guidance on the new tax, it is useful to refer to the criteria applied to the current TLV.

Under the regime in force until 31 December 2026, only habitable dwellings fall within the TLV. A dwelling is treated as habitable where it is enclosed, roofed, and equipped with minimum conveniences: electrical installation, running water, and sanitary equipment.

Dwellings which cannot be made habitable without significant works, whose cost falls on the owner, are outside the scope of the TLV. The works in question must, in particular, aim to:

• ensure the stability of the walls, roof structure, roofing, floors or internal circulations (in particular staircases);
• install or fully renew basic sanitary equipment, heating, electricity, running water, or the entirety of the exterior windows and doors.

The works must also be substantial. As a rule of thumb, the tax authority currently accepts that this test is met where their cost exceeds 25% of the property's market value as at 1 January of the tax year. Works quotes are typically used to evidence the cost.

The current guidance also refers to unfurnished dwellings. Furnished second homes remain subject to the THRS and should therefore remain outside the scope of the new tax.

The above points apply to the current TLV regime. Whether they transpose to the new tax on vacant residential property will need to be confirmed in forthcoming administrative guidelines.

Reporting Obligations

No dedicated reporting obligation for the new tax is imposed on taxpayers. That said, the occupancy return required from owners in connection with the second-home residence tax (Article 1418 of the French Tax Code) should also serve to establish and audit the new tax, as is currently the case for the TLV.

Checks to Carry Out Before 2027

1. Check whether the municipality is designated as a tight rental market, and monitor local council resolutions.
2. Reconstruct the property's vacancy period and identify who has held the property throughout.
3. Verify the rental value used as the taxable base and estimate the applicable rate.
4. Update the occupancy return required by Article 1418 of the French Tax Code, and keep supporting evidence (mandates, advertisements, works quotes, correspondence with agents).

IC Avocats advises property owners and real estate investors on the analysis of their position and the preparation for the tax coming into force in 2027.