France Wealth Tax Guide (IFI — Impôt sur la Fortune Immobilière)
the French Impôt sur la Fortune Immobilière (IFI). The guide covers: the threshold — the IFI applies to households whose net real estate assets exceed €1.3 million as of 1 January; the taxable assets — all real estate assets located in France (and outside France for French residents) are included: the main residence (with a 30% reduction — the "abattement de 30% pour la résidence principale"), second homes, rental properties, land, commercial property, shares in real estate companies (the "parts de sociétés immobilières" — the value of the shares is included proportionally to the real estate assets held by the company); the non-taxable assets — financial assets (cash, shares, bonds, life insurance), art works (the "objets d'art" and antiques are exempt), professional assets (the "biens professionnels" — if the real estate is used for the taxpayer's professional activity, it is exempt); the deductible debts — the taxpayer can deduct the debts related to the real estate assets: the outstanding mortgage loans, the unpaid taxe foncière, the renovation costs due to the seller; the debt cap — the debts are capped at 60% of the value of the real estate assets (the "plafonnement des dettes"); the progressive rate scale — the IFI rates range from 0% (net assets below €1.3 million) to 1.50% (net assets above €10 million): (a) 0%: €0–€800,000, (b) 0.50%: €800,001–€1,300,000, (c) 0.70%: €1,300,001–€2,570,000, (d) 1%: €2,570,001–€5,000,000, (e) 1.25%: €5,000,001–€10,000,000, (f) 1.50%: above €10,000,000; the rate scale is applied to the net taxable assets using the marginal rate method (each bracket is taxed at its own rate); the rate reduction mechanism (the "décote") — a progressive reduction of the IFI for taxpayers whose net taxable assets are between €1.3 million and €1.4 million (the maximum reduction is €17,500); the filing requirement — the IFI return (the "déclaration d'IFI" — form 2042-IFI) is filed with the income tax return (the déclaration des revenus) by May/June of each year; the IFI is paid at the same time as the income tax (the "avis d'imposition" is issued in August).
The IFI replaced the ISF (Impôt de Solidarité sur la Fortune) in 2018, limiting the wealth tax to real estate assets only. All amounts in Euros (EUR). For related reading, see our Property Tax Guide → and Personal Tax Guide →.
Taxable Assets
- Real estate assets included: The IFI applies to: (a) the main residence (valued at market value minus 30%), (b) second homes (valued at market value) and holiday homes, (c) rental properties (valued at market value, unfurnished or furnished), (d) land and undeveloped plots, (e) commercial and industrial real estate (unless classified as "biens professionnels"), (f) shares in real estate companies (SCI, SCPI, etc.) — proportional to the real estate assets of the company.
- Exempt assets: The following are exempt from IFI: (a) financial assets (cash, bank accounts, shares, bonds, mutual funds, life insurance policies), (b) art works and antiques (the "objets d'art, de collection ou d'antiquité"), (c) professional assets — real estate used for the taxpayer's principal professional activity (the "biens professionnels"), (d) agricultural land (if leased on a long-term basis — the "bail rural"), (e) woodland and forests (exempt up to 75% of the value under certain conditions), (f) timber rights (the "droits de plantations").
Rate Scale
- Progressive rates: (a) 0%: €0–€800,000, (b) 0.50%: €800,001–€1,300,000, (c) 0.70%: €1,300,001–€2,570,000, (d) 1%: €2,570,001–€5,000,000, (e) 1.25%: €5,000,001–€10,000,000, (f) 1.50%: above €10,000,000. The IFI is calculated by applying the rate for each bracket.
- Décote (reduction): For net taxable assets between €1.3 million and €1.4 million, the IFI is reduced by the "décote" formula: IFI = (Net Taxable Assets × Rate) — (€17,500 — 1.25% × (Net Taxable Assets — €1,300,000)). This smooths the entry into the tax.
For the property transfer taxes and the taxe foncière, see our Property Tax Guide →. For the income tax treatment of rental income, see our Real Estate Investment Guide →.