The French wealth tax return (IFI)

We’ve noticed that there are many misconceptions about wealth tax in France, probably because the rules have evolved (for the better!) since 2018. Let’s take a closer look to clear things up.

What is the French Wealth tax ?

Since 2018, the IFI tax (Impôt sur la Fortune Immobilière) has effectively replaced the ISF tax (Impôt de Solidarité sur la Fortune). As the name suggests, the IFI now only concerns real estate properties, whereas the ISF covered the entire wealth of the taxpayer. This means that the taxable base has significantly decreased for most people affected.

Who is Subject to the French Wealth tax ?

The IFI tax applies to:

• All French tax residents whose total taxable worldwide real estate assets exceed 1.3 million euros on January 1st of each year.
• All non-French tax residents whose total taxable French real estate assets exceed 1.3 million euros on January 1st of each year.

Good to know: To encourage the arrival of new wealthy taxpayers, a newly arrived tax resident in France will only pay IFI on their French properties for the first 5 years!

What Elements Should be Declared on the French Wealth tax ?

All elements closely or remotely related to real estate properties must be declared, including:

• Houses, apartments
• Garages, cellars
• Shares in real estate companies (SCI, SCPI)
• Bare or under construction lands
• Usufruct of real estate properties

How is the French Wealth tax Calculated ?

Fortunately, there are several ways to reduce the taxable base of your IFI. You can:

• Deduct 30% of the value of your primary residence
• Exempt your professional assets
• Deduct the amount of loans used to finance properties and the costs of work carried out on these properties
• Deduct the amount of property taxes as well as the theoretical amount of IFI to be paid

Once the various deductions have been made, you will be subject to the following scale:

Fraction of the net taxable value of the wealth	Applicable Rate
Up to €800,000	0%
From €800,001 to €1,300,000	0.50%
From €1,300,001 to €2,570,000	0.70%
From €2,570,001 to €5,000,000	1%
From €5,000,001 to €10,000,000	1.25%
Above €10,000,000	1.50%

When and How to Declare and Pay your French Wealth tax

The IFI must be declared at the same time as income tax using the form 2042-IFI, which is an annex to the main declaration. The declaration dates are the same, from late May to early June depending on your department. You will receive your tax assessment between August and September and must pay online, similar to income tax.