She is a true goose that lays the golden eggs. In 2021, despite the health crisis, municipalities and departments collected close to 20 billion euros in transfer rights for consideration (DMTO), also called notary fees. A 22% increase in the amount of this indirect tax compared to 2019 (reference year before the health crisis), linked to the incredible vitality of the real estate sector in France. Last year, the real estate market registered 1.2 million transactions, a record figure. “These increases are considerable” and “their dynamism (is) beneficial for the communities”, rejoices the Public Finance and Local Public Management Observatory (OFGL) in its 2022 local finance pre-report, published this Wednesday, June 22.
In detail, it is the departments that capture most of this financial windfall. In 2021, they earned €14.3 billion in transfer rights for consideration. A real jackpot, whose amount exceeds the already large amount collected in 2019 by 2,800 million euros. To establish a high level of collection, almost all departments apply the maximum rate of 4.5% on the cadastral tax. Only four territories have an effective rate of less than 3.8%: Indre, Isère, Morbihan and Mayotte. These 14,300 million euros received last year allowed them to strengthen their self-financing capacity but, above all, reduce their outstanding debt by 1.9%.
Another link to make the most of the DMTO: the municipalities. The latter have earned about 4,900 million euros thanks to the tax. They apply a tax rate of 1.2% (CGI, art. 1584) compared to 2019, there are 696 million euros more in their coffers. “Nearly 90% of the municipalities with more than 5,000 inhabitants have DMTO products”, recalls the OFGL. We observe, according to the report, that tax revenues have skyrocketed, especially in cities with between 5,000 and 1,000,000 inhabitants. For these municipalities, the increase in DMTO is around 25% in 2021.
As a reminder, transfer rights for consideration depend on several factors: the number of real estate transactions, the sale price of the home, and the rate of property registration tax. Today, the general tax rate amounts (with some exceptions) to 5.81% (municipal participation: 1.2% + departmental participation: 4.5% + 0.107% for the tax base of costs). A rate that the law requires to apply until May 31, 2023.
A dynamic in waiting?
Driven by rising house prices, the collection of broadcasting rights for consideration has increased by 10 billion euros since 2014. But the mechanics could stop this year. The rise in interest rates this spring will not be without consequences on the number of real estate transactions between now and the end of the year. Specifically, a certain number of households with limited income should find it more difficult to obtain their bank loan. Fewer transactions potentially mean lower tax revenue in 2022. A boring scenario for local authorities.