The cadastral rental value

Two identical flats in the same building can carry a 400 € gap in property rates. The difference comes neither from the price paid nor from the rent received: it comes from a cadastral record drawn up decades ago that nobody has reread since.

One base for several taxes

Property rates, the household waste collection charge and the tax on second homes all share one origin: the cadastral rental value of the premises. Understanding that value means understanding all three lines of the notice at once.

This value represents the theoretical annual rent the property would produce if let on normal terms. It is theoretical in the full sense: it is not compared with the rent actually received, nor with the sale price of the property.

The computation rests on a weighted floor area, which is not the habitable area. Outbuildings, annexes and comfort features enter it with their own coefficients. A cellar, a garage, a swimming pool or a lift therefore weigh in the total.

To that is added a comfort category, from the most modest to the most luxurious, assigned when the premises were first classified. It is often the most debatable item, because it reflects the state of the building at a sometimes very distant date.

That age is the structural weakness of the system. A renovated district and a run-down one may both retain classifications set in the same period, although their situations have since diverged. The gap feeds through to the notice every year.

The detail of the computation appears on the valuation record of the premises, which the tax authority supplies on request. Consulting it is the precondition of any serious challenge: without it, one argues about a result without knowing what produced it.

The flat-rate allowance for costs

Gross rental value is not taxed as it stands. A flat-rate allowance first halves it, to reflect the management, insurance, maintenance and depreciation costs a letting owner would bear.

What results is known as cadastral income. It is that figure, and not gross rental value, which local authorities multiply by the rates they vote. Confusing the two mechanically doubles the estimate one forms of the bill.

Rental values are moreover uprated each year by a national coefficient. An owner whose bill rises without any local rate having moved is simply experiencing that uprating, and not a decision taken by their council.

Who owes the tax, and on what date

The taxpayer is the owner or life tenant of the built property on the first of January of the tax year. A sale in February changes nothing for the current year: the seller remains legally liable, even if the deed provides for a split between the parties.

That contractual split, common in conveyancing, binds only seller and buyer. The tax authority continues to claim the whole from the owner as at the first of January, who must then turn to the other party.

• The owner or life tenant on the first of January is the legally liable person
• A sale during the year does not alter the assessment for that whole year
• The bare owner owes nothing while the life interest subsists
• In a life annuity sale with reserved use, the buyer pays the tax

Letting does not shift the burden either. A let dwelling stays assessed in the landlord's name, and no tenancy agreement can change that. Only one of the three lines on the notice may be recovered from the tenant, and the next module says which.

For property held through a company, the company itself is liable, and the tax is a deductible expense against its profit. That is one of the concrete differences between direct holding and holding through a structure, often overlooked when choosing.

For a self-employed person working from home, the part of the dwelling used for the business opens a deduction as a business expense. It is computed in proportion to the area used, and requires keeping the notice as supporting evidence.