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PROPERTY WEALTH TAX (IMPÔT SUR LA FORTUNE IMMOBILIÈRE - IFI)
PROPERTY WEALTH TAX (IMPÔT SUR LA FORTUNE IMMOBILIÈRE - IFI)
Since 01 January 2018, Property Wealth Tax (IFI) has replaced the French Wealth Tax (Impôt de Solidarité sur la Fortune - ISF).
Tax Basis.
The new tax applies to any natural person who, along with his/her spouse (spouse, civil partner, or cohabitating partner) and under-age children, possesses net property assets worth more than €1,300,000 as of 01 January of the fiscal year. The assets included in the IFI calculation basis vary depending on the residence of the taxpayer. Thus, a French resident shall be subject to taxation on all of his/her property assets located both in France and abroad, while a foreign resident shall be taxed only on his/her buildings located in France.
The IFI calculation takes into account property and immovable rights held directly or through shares of companies, regardless of their area of activity and the allocation of such real estate assets, subject to exemptions.
Deductible Debts
Three conditions are necessary for the deduction of debts under the IFI. They must pertain to taxable assets, exist as of 01 January of the fiscal year, and must be effectively borne by the taxpayer or a member of his/her tax residence.
However, there are some limitations to this deduction. In particular, the following are not deductible:
- Personal debts (related to the taxpayer, his/her tax residence, or his/her family group) contracted through one or more interposed organizations or companies.
- Loans taken out by the taxpayer with a controlled company. In certain situations, a deduction is nevertheless possible by providing proof of the normal nature of the terms of the loan. The deduction of "bullet loans" (prêts in fine) is also regulated and limited. These rules should be assessed on a case by case basis.
Exemptions
Buildings relating to the taxpayer's main professional activity or to the activity of the company in which he/she pursues his/her professional occupation are exempt.
Under certain conditions, exemptions are also made for properties related to the operations of the business holding such assets or of a member of its group.
Finally, direct or indirect shareholdings of less than 10% of the share capital or voting rights of operating companies (conducting industrial, commercial, artisanal, agricultural, or freelance activities) are also exempt from the IFI.
Rate
The rate applicable to the IFI is identical to that of the ISF. It is a progressive rate that ranges from 0.50% to 1.50%
CM-Tax law firm, based in Lyon and Aix en Provence, assist his clients all over France especially in Nice, the French riviera and Paris, can help you to assess your situation as well as to prepare for your tax declarations.
Tax Basis.
The new tax applies to any natural person who, along with his/her spouse (spouse, civil partner, or cohabitating partner) and under-age children, possesses net property assets worth more than €1,300,000 as of 01 January of the fiscal year. The assets included in the IFI calculation basis vary depending on the residence of the taxpayer. Thus, a French resident shall be subject to taxation on all of his/her property assets located both in France and abroad, while a foreign resident shall be taxed only on his/her buildings located in France.
The IFI calculation takes into account property and immovable rights held directly or through shares of companies, regardless of their area of activity and the allocation of such real estate assets, subject to exemptions.
Deductible Debts
Three conditions are necessary for the deduction of debts under the IFI. They must pertain to taxable assets, exist as of 01 January of the fiscal year, and must be effectively borne by the taxpayer or a member of his/her tax residence.
However, there are some limitations to this deduction. In particular, the following are not deductible:
- Personal debts (related to the taxpayer, his/her tax residence, or his/her family group) contracted through one or more interposed organizations or companies.
- Loans taken out by the taxpayer with a controlled company. In certain situations, a deduction is nevertheless possible by providing proof of the normal nature of the terms of the loan. The deduction of "bullet loans" (prêts in fine) is also regulated and limited. These rules should be assessed on a case by case basis.
Exemptions
Buildings relating to the taxpayer's main professional activity or to the activity of the company in which he/she pursues his/her professional occupation are exempt.
Under certain conditions, exemptions are also made for properties related to the operations of the business holding such assets or of a member of its group.
Finally, direct or indirect shareholdings of less than 10% of the share capital or voting rights of operating companies (conducting industrial, commercial, artisanal, agricultural, or freelance activities) are also exempt from the IFI.
Rate
The rate applicable to the IFI is identical to that of the ISF. It is a progressive rate that ranges from 0.50% to 1.50%
CM-Tax law firm, based in Lyon and Aix en Provence, assist his clients all over France especially in Nice, the French riviera and Paris, can help you to assess your situation as well as to prepare for your tax declarations.