Understanding the French Real Estate Wealth Tax (IFI)
Kees de Jager, Saturday, 13 July 2024
The Impôt sur la Fortune Immobilière (IFI) is a French wealth tax that has been in effect since January 1, 2018. This tax replaces the former Impôt de Solidarité sur la Fortune (ISF) and specifically targets real estate. The number of taxpayers subject to the IFI has increased in recent years, partly because the threshold for tax liability has not been adjusted for inflation.
Who is liable for tax?
Anyone residing in France with a real estate portfolio worth over €1.3 million is subject to the IFI. Non-residents of France who own property in France may also be liable.
How is the wealth calculated?
Taxpayers must determine the value of their real estate themselves. This valuation must be based on the market value as of January 1 of the tax year. To determine the correct value, taxpayers can use databases such as and the real estate value request service on . Debts directly related to the purchase, maintenance, or improvement of the property can be deducted from the gross value.
Rate Structure
The IFI has a progressive rate structure that starts at 0.5% and rises to 1.5% for wealth over €10 million. Here is an overview of the tax brackets:
Deductions
A statutory deduction of 30% applies to the main residence unless it is held by an SCI. For other properties, deductions of 10% to 20% are common, for example for co-owned properties, except for co-ownership between spouses.
Changes in Legislation
The 2024 Finance Act has limited certain deductions. Only debts related to the purchase or renovation of taxable real estate are still deductible. This means that taxpayers who own their real estate through a company may have to pay a higher IFI.
Furnished Rentals
For furnished rentals, three conditions must be met to be excluded from the IFI: the rental must be the main activity, generate more than €23,000 per year, and constitute more than half of professional income. Net income, not gross profit, is considered for this purpose.
Conclusion
The Impôt sur la Fortune Immobilière is an important tax for anyone with significant real estate holdings in France. It is essential to be well informed about the rules and rates to avoid surprises. For detailed information and specific situations, it is advisable to seek professional tax advice.
The Impôt sur la Fortune Immobilière (IFI) is a French wealth tax that has been in effect since January 1, 2018. This tax replaces the former Impôt de Solidarité sur la Fortune (ISF) and specifically targets real estate. The number of taxpayers subject to the IFI has increased in recent years, partly because the threshold for tax liability has not been adjusted for inflation.
Who is liable for tax?
Anyone residing in France with a real estate portfolio worth over €1.3 million is subject to the IFI. Non-residents of France who own property in France may also be liable.
How is the wealth calculated?
Taxpayers must determine the value of their real estate themselves. This valuation must be based on the market value as of January 1 of the tax year. To determine the correct value, taxpayers can use databases such as and the real estate value request service on . Debts directly related to the purchase, maintenance, or improvement of the property can be deducted from the gross value.
Rate Structure
The IFI has a progressive rate structure that starts at 0.5% and rises to 1.5% for wealth over €10 million. Here is an overview of the tax brackets:
| Value of Wealth | Rate |
|---|---|
| Up to €800,000 | 0% |
| From €800,001 to €1,300,000 | 0.5% |
| From €1,300,001 to €2,570,000 | 0.7% |
| From €2,570,001 to €5,000,000 | 1% |
| From €5,000,001 to €10,000,000 | 1.25% |
| Over €10,000,000 | 1.5% |
Deductions
A statutory deduction of 30% applies to the main residence unless it is held by an SCI. For other properties, deductions of 10% to 20% are common, for example for co-owned properties, except for co-ownership between spouses.
Changes in Legislation
The 2024 Finance Act has limited certain deductions. Only debts related to the purchase or renovation of taxable real estate are still deductible. This means that taxpayers who own their real estate through a company may have to pay a higher IFI.
Furnished Rentals
For furnished rentals, three conditions must be met to be excluded from the IFI: the rental must be the main activity, generate more than €23,000 per year, and constitute more than half of professional income. Net income, not gross profit, is considered for this purpose.
Conclusion
The Impôt sur la Fortune Immobilière is an important tax for anyone with significant real estate holdings in France. It is essential to be well informed about the rules and rates to avoid surprises. For detailed information and specific situations, it is advisable to seek professional tax advice.
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