Property tax up 52% in 10 years: how it changes the buy or rent equation

Property tax up 52% in 10 years: why it matters for buy or rent decisions

Over the last decade, French property tax (taxe foncière) has increased by around +52% on average. This is much faster than long‑term inflation and wage growth, and it has a direct impact on the financial balance between buy or rent.

In a simulator like buy-or-rent.net, this dynamic is controlled by two key parameters:

• taxe_fonciere_annuelle: the annual property tax you pay in year 1 if you buy;
• taux_revalorisation_taxe_fonciere_annuelle: the percentage increase of that tax every year.

Understanding how these two variables evolve over 10, 20 or 25 years is crucial if you want a data‑driven comparison between buying and renting.

1. What property tax really represents in a homeowner’s budget

1.1. An underestimated cost compared with the mortgage

Most buyers focus on:

• the loan rate (currently around 3.6% in France);
• notary fees (7–8% in existing properties, 2–3% in new build);
• borrower insurance (around 0.25–0.45% of the loan amount).

But property tax is a recurring, lifetime expense that never disappears. Depending on the city, it can range from roughly €450 to more than €5,000 per year. In any serious buy or rent analysis, ignoring this line will distort the result.

1.2. Simple example: a €250,000 flat

Assume you buy a €250,000 apartment in a mid‑sized French city:

• Annual property tax in year 1 (taxe_fonciere_annuelle): €1,200;
• Annual revaluation rate (taux_revalorisation_taxe_fonciere_annuelle): 3%;
• Holding period: 20 years.

Even before talking about the mortgage, property tax alone will look like this:

• Year 1: €1,200;
• Year 10 (with +3%/year): €1,200 × 1.03⁹ ≈ €1,564;
• Year 20: €1,200 × 1.03¹⁹ ≈ €2,165.

Total over 20 years (geometric series) ≈ €1,200 × (1.03²⁰ − 1) / 0.03 ≈ €32,200.

In other words, over 20 years, property tax alone represents more than 12% of the purchase price. In a buy or rent calculation, this amount must be compared with:

• the rent you would have paid as a tenant;
• the investment returns (ETFs, savings, etc.) you might get if you do not lock this money into real estate.

2. +52% in 10 years: how we get to that figure

2.1. A national average hiding huge local differences

The +52% over 10 years figure is a national average. It roughly corresponds to an annual increase of about 4.3% per year (ignoring compounding details), which is clearly higher than:

• long‑term inflation (around 1–2% on average, excluding recent spikes);
• wage growth for many households.

Behind that average, some municipalities have increased property tax by more than 70%, while others have been much more moderate. That’s why, in a buy or rent simulator, it is important to set:

• taxe_fonciere_annuelle according to the specific city and property type;
• a realistic taux_revalorisation_taxe_fonciere_annuelle, for example 2–5% depending on the local history.

2.2. Automatic revaluations and local votes

Property tax tends to rise because of two main mechanisms:

• National revaluation of cadastral values, often indexed to inflation;
• Local tax rate decisions voted by municipalities and other local authorities.

In your buy or rent simulation, this is captured by the taux_revalorisation_taxe_fonciere_annuelle parameter. Even a 1‑point difference on this rate will have a strong impact over the long term.

3. Two numerical scenarios: 2% vs 4.5% annual increase

3.1. Scenario A: moderate 2% annual growth

Let’s go back to our €1,200 property tax example:

• taxe_fonciere_annuelle: €1,200;
• taux_revalorisation_taxe_fonciere_annuelle: 2%;
• Duration: 20 years.

Tax in year 20: €1,200 × 1.02¹⁹ ≈ €1,768.

Total over 20 years ≈ €1,200 × (1.02²⁰ − 1) / 0.02 ≈ €29,200.

In this scenario, property tax remains relatively contained, but still represents a significant share of your overall cost of ownership.

3.2. Scenario B: stronger 4.5% annual growth (consistent with +52% in 10 years)

Now let’s simulate a rate closer to what has been observed nationally:

• taxe_fonciere_annuelle: €1,200;
• taux_revalorisation_taxe_fonciere_annuelle: 4.5%;
• Duration: 20 years.

Tax in year 10: €1,200 × 1.045⁹ ≈ €1,840 (about +53% compared with year 1);

Tax in year 20: €1,200 × 1.045¹⁹ ≈ €2,820.

Total over 20 years ≈ €1,200 × (1.045²⁰ − 1) / 0.045 ≈ €40,700.

The sole difference between 2% and 4.5% generates over €11,000 of extra tax over 20 years. In a buy or rent calculation, this can be enough to flip the financial advantage from owning to renting or the other way around.

4. Buy or rent: how to integrate property tax in the comparison

4.1. Homeowners: a recurring, non‑recoverable cost

As an owner‑occupier, property tax:

• does not repay your principal, unlike part of your mortgage payment;
• is not an investment, unlike renovations that increase your property value;
• comes on top of other costs: home insurance, maintenance, energy upgrades (DPE‑related works), service charges.

In a buy or rent simulator, you typically add up:

• monthly mortgage payments (loan rate around 3.6%, insurance 0.25–0.45%);
• notary and agency fees spread over the holding period;
• renovation and maintenance costs;
• taxe_fonciere_annuelle projected with taux_revalorisation_taxe_fonciere_annuelle;
• possible prepayment penalties if you sell before the end of the loan.

4.2. Tenants: no property tax, but rent inflation

Tenants do not pay property tax directly, but they are exposed to:

• annual rent increases, usually indexed to the IRL in France;
• potentially sharp rent resets when a lease is renewed or a new tenancy starts.

In a buy or rent simulation, you enter:

• your current rent;
• an annual rent increase rate (for example 2–3% per year);
• an investment rate for your savings (for instance 3–5% for diversified ETFs) if you invest the money you do not spend on buying.

The comparison is then made between:

• the net cost of ownership (mortgage, property tax, maintenance, etc.);
• the cost of renting (growing rents) plus the future value of your invested savings.

5. Full example: buy vs rent with rising property tax

5.1. Starting assumptions

Imagine you are hesitating between buying and renting a two‑bedroom flat in a large French city:

• Purchase price: €300,000;
• Current rent: €1,100/month;
• Initial property tax: €1,600/year;
• taux_revalorisation_taxe_fonciere_annuelle: 4%;
• Annual rent increase: 2.5% (IRL‑linked);
• Projection horizon: 20 years;
• Loan rate: 3.6% over 20 years;
• Borrower insurance: 0.30%;
• Investment rate if you rent and invest the difference: 4%/year.

5.2. Owner scenario: property tax impact

Over 20 years, with a 4% annual increase:

• Year 1: €1,600;
• Year 10: €1,600 × 1.04⁹ ≈ €2,275;
• Year 20: €1,600 × 1.04¹⁹ ≈ €3,486.

Total over 20 years ≈ €1,600 × (1.04²⁰ − 1) / 0.04 ≈ €47,400.

This amount comes on top of:

• interest paid on the mortgage (tens of thousands of euros);
• renovation and maintenance (for example €20,000 over 20 years, including energy efficiency works linked to the DPE);
• insurance and service charges.

Within a buy or rent simulator, this €47,400 is a major component of your total ownership cost.

5.3. Tenant scenario: rent + invested savings

If you remain a tenant:

• Initial rent: €1,100/month, or €13,200/year;
• With +2.5%/year, rent in year 20: around €21,600/year;
• Total rent over 20 years: roughly €320,000–€340,000 (order of magnitude).

But you do not pay:

• property tax;
• notary fees at entry;
• major structural works.

If the difference between the cost of owning and the cost of renting is invested at a 4% annual return, the accumulated capital can be substantial and may offset part or all of the benefit of owning. The final result depends strongly on:

• the loan rate;
• the property tax increase (taux_revalorisation_taxe_fonciere_annuelle);
• the rent increase rate;
• your investment return.

That is exactly what a dedicated tool like buy-or-rent.net is designed to test.

6. Why taux_revalorisation_taxe_fonciere_annuelle is a strategic parameter

6.1. Small change in rate, big cumulative effect

Let’s keep the €1,600 initial property tax over 20 years:

• at 2% annual growth: total ≈ €39,000;
• at 4%: total ≈ €47,400;
• at 5%: total ≈ €52,900.

Between 2% and 5%, the difference exceeds €13,000 over 20 years. That’s equivalent to several years of tax, or a significant share of a major renovation project.

In a buy or rent approach, it makes sense to:

• test several revaluation scenarios (2%, 3.5%, 4.5%, 5%);
• compare them with different rent inflation scenarios;
• see how sensitive your decision is to these assumptions.

6.2. Linking property tax to inflation

Recent years have shown that inflation can rise quickly (especially energy and food). Part of property tax growth is linked to this inflation through the revaluation of cadastral values. If inflation remains high, the parameter taux_revalorisation_taxe_fonciere_annuelle could stay structurally higher than in the 2010s.

In a buy or rent simulator, a prudent approach is to:

• use a conservative assumption (for example 3–4%) rather than an overly optimistic 1%;
• compare it with a low scenario to understand the range of possible outcomes.

7. How to use a buy or rent simulator with property tax

7.1. Setting taxe_fonciere_annuelle realistically

To fill in taxe_fonciere_annuelle correctly in a tool like buy-or-rent.net (or acheter-ou-louer.com in French):

• use the latest property tax bill for the target property if available;
• or look up typical levels by municipality (public data, agents, online resources);
• remember that larger houses and high‑value properties tend to be more heavily taxed.

7.2. Choosing a coherent taux_revalorisation_taxe_fonciere_annuelle

For this parameter, you can:

• check how property tax has evolved in your city over the last 5–10 years;
• try several values: 2%, 3.5%, 4.5%, 5%;
• see from which level ownership becomes clearly more or less expensive than renting.

Combined with:

• the loan rate (around 3.6%);
• notary and agency fees;
• your expected investment return if you rent;
• the annual rent increase;

you get a quantitative, scenario‑based view of your buy or rent dilemma.

8. Conclusion: +52% in 10 years is a signal you cannot ignore

A +52% increase in property tax over 10 years fundamentally changes the economics of homeownership. In some situations, buying still comes out ahead, particularly if:

• rents increase quickly in your area;
• real estate prices are resilient;
• your alternative investment returns are modest.

In other contexts, the combination of a higher loan rate, strong property tax, and rapid revaluation can make renting financially more attractive, provided you invest the difference consistently. There is no universal answer: buy or rent always depends on your personal situation, your city and your assumptions.

This article is for information purposes only and does not constitute personalized financial advice. To measure the concrete impact of property tax and its evolution on your own case, adjust the taxe_fonciere_annuelle and taux_revalorisation_taxe_fonciere_annuelle parameters and run several scenarios in the simulator.

Simulate your situation on buy-or-rent.net