The government has announced an increase in the transfer taxes payable on the acquisition of property in France. UPDATE: The government announce that the increase will not apply for purchase of main residence under €250K. 2nd Dec

The taxes currently amount to 5.80% of the purchase price, although in a small number of departments it is 5.09%. They are paid by the purchaser.

The taxes are known in the vernacular as the 'frais de notaire' but more formally as the 'droits de mutation'.

The announcement was made to cool the anger of departmental councils (the main beneficiaries) for whom the taxes form a large part of their budget.

With property sales having plummeted over the past 2 years, many councils are finding themselves in financial difficulty.

The plan is to increase the taxes by 0.5% percentage points for a period of 3 years, but it will be up to each departmental council to decide whether they wish to apply the increase. As the association of departmental councils has warmly welcomed the announcement, it is expected that most will decide to do so.

No date has yet been set for the introduction of the increase, but it will not be before next year.

Not surprisingly, real estate professionals have reacted with concern, at a time when the property market is in a relatively fragile state.

Once notaire fees are added to the taxes, the total fees and taxes payable will be in the order of 8% of the purchase price, although with some slight variation, depending on the purchase price.

On the purchase of a property costing €200,000 it will amount to an additional €1,000 in taxes, as can be seen from the example below.

New build properties benefit from an advantageous tax regime with a tax rate of 0.7% (plus VAT) and are not affected by this change.