Property tax, recoverable charges, co-ownership fees: who pays what between landlord and tenant?

Property tax, operating costs, ownership expenses, condo Fees : who pays what?

Investing in real estate also means understanding the various charges that come with it. Between property tax, co-ownership fees, and the division of expenses between landlord and tenant, things can get confusing. Here’s a clear breakdown to help you navigate it all.

📌 Property tax: a cost for owners only

Property tax is a local tax paid annually by the property owner, whether the property is occupied or not. It is calculated based on the rental value of the property as estimated by the local land registry, with a rate set by the municipality and other local authorities.

In France, it typically includes:

- The property tax on built properties ;

- The waste collection tax (TEOM), often included in the property tax bill, but which can be passed on to the tenant.

🧾 Co-ownership charges: what they include

If the property is part of a co-ownership (condominium), the owner must pay co-ownership fees, divided according to the proportion of ownership.

There are two main types:

1. General charges: maintenance of common areas, hallway lighting, building insurance, property manager (syndic) fees, etc.

2. Special charges: costs linked to shared amenities such as elevators, central heating, gardens, swimming pools, etc.

These charges are approved during the co-owners’ general meeting and typically billed quarterly as advance payments.

💼 Advance charges: how they work

Advance payments (provisions) are estimated amounts paid in advance to cover future expenses:

- The owner pays provisions to the condominium to fund building-related costs.

- The tenant pays monthly provisions to the landlord (or property manager) to cover their share of recoverable expenses.

These advances are adjusted annually based on actual expenses, which may lead to:

- A refund to the tenant in case of overpayment;

- An additional payment if the initial advance was insufficient.

For investors, estimating these provisions accurately is essential to forecasting net rental income.

🤝 Who pays what: owner vs tenant

When a property is rented out, certain costs can be passed on to the tenant, while others remain the landlord’s responsibility.

Paid by the tenant :

- Day-to-day maintenance of shared spaces;

- Waste collection tax (TEOM);

- Minor repairs or usage-based costs (e.g., replacing lightbulbs, cleaning common areas);

- Shared utilities such as heating or elevator, depending on usage.

Paid by the owner:

- Property tax;

- Major repairs or improvements (roof repairs, façade work, energy efficiency upgrades, etc.);

- Syndic fees, building insurance, reserve funds, and non-recoverable charges;

- Full co-ownership fees (only a portion can be recovered from the tenant).

Understanding this distribution is essential for both landlords and tenants. It ensures transparency in rental agreements, helps avoid misunderstandings, and allows investors to anticipate their return more accurately.

🔗 Ready to give it a try? Start investing in tokenized real estate from just €10 with Shelters!