How Does France’s Real Estate Wealth Tax (IFI) Work?

Since 2018, France’s Real Estate Wealth Tax (Impôt sur la Fortune Immobilière – IFI) has replaced the former wealth tax (ISF). This tax applies to individuals who own substantial real estate assets. But what counts as taxable property? Who needs to declare it, and when? Here’s what you need to know.

What Is the IFI?

The IFI targets individuals whose net real estate assets exceed €1.3 million as of January 1 of the tax year. It applies whether or not you are a French tax resident.

The tax is reported at the same time as your annual income tax return. The household subject to IFI includes:

• A single person (unmarried, widowed, divorced, or legally separated),

• A couple (married, in a civil union, or in a long-term partnership),

• Minor children whose property is legally managed by the taxpayer or their spouse.

Note: The IFI household may differ from your income tax household. For example, adult children, even if attached for income tax purposes, must file their own IFI return if their personal net assets exceed €1.3 million.

Which Assets Are Taxable?

IFI is based on your net taxable real estate assets as of January 1. This includes the value of your eligible property minus allowable debts.

Taxable assets include:

• Built and unbuilt real estate owned directly (e.g. houses, apartments, land),

• Your main residence (with a 30% valuation allowance),

• Rental or personal-use properties and their annexes (garage, storage, etc.),

• Properties under construction,

• Land (e.g. agricultural or building plots),

• Property held indirectly through shares or units in real estate-holding companies,

• Real estate that does not qualify as professional property.

Exemptions apply if:

• The property is used for a professional activity (commercial, industrial, agricultural, etc.),

• The owner (or their partner or minor child) actively uses the property in their main professional occupation,

• The property is essential to that activity.

Similarly, shares in companies that hold qualifying professional-use property may be exempt, if the owner plays a primary role in the company’s operations.

Which Debts Can Be Deducted?

Debts directly tied to taxable real estate can reduce your taxable base, as long as they exist as of January 1 of the tax year.

Deductible debts include:

• Purchase loans for real estate or company shares linked to real estate,

• Costs of construction, renovation, or extension,

• Maintenance expenses,

• Property-related taxes (like property tax),

• Proportional costs linked to real estate held via companies.

Limitation: If your total taxable assets exceed €5 million and your deductible debt exceeds 60% of your asset value, only 50% of the excess debt beyond that limit may be deducted.

IFI Tax Rates

IFI applies progressively from €800,000, even though liability only begins at €1.3 million in net assets.

Example: For a net real estate value of €1.5 million:

• First €800,000 → 0%

• Next €500,000 → 0.5% = €2,500

• Final €200,000 → 0.7% = €1,400
  Total IFI = €3,900

A discount mechanism is available for assets between €1.3M and €1.4M, calculated as:
€17,500 – (1.25% × taxable value)

Can You Reduce Your IFI?

Yes, certain donations to public-interest organizations grant an IFI reduction of 75% of the donation amount, up to a maximum of €50,000.

Additionally, the IFI is capped based on your income:

• The total IFI due must not exceed the difference between:

  • Your IFI liability and

  • 75% of your global net income (after professional expenses), including exempt income and any income subject to a flat-rate tax.

A simulator is available on the French tax website to help you estimate your IFI.

Declaring IFI

IFI must be reported alongside your income tax return. Deadlines vary by department and whether you file online or by paper.

Since 2019, all taxpayers with internet access are required to file online. Paper returns are still accepted for those without internet access.

• Use Form 2042-IFI if you are subject to income tax

• Use Form 2042-IFI-COV if you are not liable for income tax

Paying the IFI

You will receive a separate tax notice for your IFI, usually due by September 15.

Payment methods:

• Over €300: Must be paid online through your account on impots.gouv.fr, or via mobile app.

• €300 or less: May be paid by cheque, TIPSEPA (French or Monegasque accounts), cash, or bank card at authorized local payment points.

Tip: You can manage and view all your owned properties and their details via the “Manage my real estate” section in your online tax account.