Real estate wealth tax: which properties are concerned?

HomeTaxationReal estate wealth tax: which properties are concerned?

Some people with very high property values may be subject to real estate wealth tax. However, not all types of real estate are eligible. The following is an explanation.

What is the real estate wealth tax and how does it work?

  • Who is concerned by the IFI? The new tax on real estate wealth, which replaced the solidarity tax on wealth at the beginning of 2018, applies to any person whose real estate assets have a value of more than 1.3 million euros (the same amount as for the ISF). The person must of course depend on the French tax systems (having a home in France, working in France or having an economic activity in France even if residing abroad).
  • When to declare the IFI? The declaration of the tax on real estate wealth and the declaration of income must be done at the same time either between April and June.
  • Taking into account the composition of the tax household: regarding the tax household that is taken into account in this calculation, there are small differences with the one taken into account for the calculation of the income tax. Thus, the assets of the spouse, of the person to whom you are linked by a PACS or of the companion are taken into account even if the spouses, PACS or companions are taxed separately. On the other hand, the assets of an adult child who is still part of the same tax household as his or her parents are not taken into account. It may also be subject to the IFI if it reaches the required value in real estate assets.

What real estate assets are taken into account?

As already mentioned, the person must be fiscally domiciled in France and the assets taken into account are those held on January 1 of the year in question. The assets taken into account are net taxable assets or even the net taxable base. We speak of net wealth because debts are not taken into consideration. There is a simple formula for calculating this: net taxable assets = value of gross assets - an allowance of 30% on the value of the main residence (calculated on its real market value) - deductible debts. Note also that real estate held abroad is also accounted for.

The persons concerned may own real estate directly. In this case, the property may be already built, under construction or unbuilt (greenfield or agricultural land). The property may also be owned indirectly, for example through shares in a real estate investment trust. A number of properties intended for business use are excluded.

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