The 2018 Finance Act launched the reform of the wealth tax (ISF) expected by many individuals. The ISF is therefore abolished in 2018 and replaced by the IFI, the French Fortune Tax on Real Estate. The great novelty of the IFI is that it only concerns property owners.
The big winners of this reform are therefore taxpayers whose wealth is based on movable assets : financial investments (savings books, securities portfolios, life insurance, etc.), and other movable assets (cars, etc.).
Who are the owners concerned by the IFI ?
The Fortune Tax on Real Estate concerns tax households whose real estate assets exceed €1,300,000 on January 1st, 2018. Taxable assets include all real estate assets and rights, including shares in listed real estate companies, shares in real estate investment trusts (SCPI and OPCI) and real estate trusts (SCI).
On the other hand, as under the ISF regime, real estate used for professional activity is not taken into account in the calculation of taxable assets. In addition, the reform retains the 30% allowance on the main residence and provides for a number of deductible debts : work carried out for repairs and maintenance, improvement, construction, reconstruction and expansion expenses, in particular.
The IFI scale
You are taxable to the IFI if your net taxable assets exceed the tax threshold of €1,300,000. The IFI is calculated according to the following progressive scale:
- Between 0 and 800 000 € : 0 %.
- Between €800,000 and €1,300,000 : 0.5%.
- Between €1,300,000 and €2,570,000 : 0.7%.
- Between €2,570,000 and €5,000,000 : 1%.
- Between €5,000,000 and €10,000,000 : 1.25%.
- Over €10,000,000,000 : 1.5%.
Source: Ministry of Action and Public Accounts
The statutory tax cap does not allow the amount of the IFI and income tax to exceed 75% of the taxpayer's income.
The taxpayer can also benefit from reductions in his Real Estate Tax by investing in SMEs or by making donations to organizations of general interest (solidarity companies of social utility (ESUS), associations, etc.).<