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:
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.