New French holiday home tax announced

A new property tax, which is due to come into force next year, will affect masses of ski properties as the tax touches properties which are rented out for part of the year.

Introduced by President Nicolas Sarkozy as part of an overhaul of the property tax laws and in a bid to improve economic credentials, the tax could be in place by the 1st of January 2012.

French government would estimate the value of the annual rent the property could generate (valeur locative cadastrale) - then charge the owner 20 per cent. Anyone who rents their property out for the whole year with a local letting agent will be exempt from the new tax.

The change has not been welcomed by property owners, as they already pay two taxes to the French government. Just like all home-owners in France they pay the taxe fonciere, which is paid by the house owner and the taxe d'habitation, which is paid by those who live in it. This additional tax could force owners to sell their property as it becomes too expensive to maintain.

Legal experts say the tax could be seen as discriminatory towards foreign owners of second homes and might face a legal challenge in the European Court before it passes as law.