Roche & Cie

The possible cuts applicable to the statement of solidarity tax on wealth (ISF)

After assessing your property, it remains to address the issue of any authorized or tolerated cut you’ll be able to practice to decrease the value of these assets.

Some discounts are no longer a debate in that they are expressly authorized. These include:

  The 30% discount applicable on the principal residence

  The discount of leased assets.

However, the administration does not accept discounts practiced on secondary homes where the proprietor still uses it.

To determine the value of your wealth tax and possible discounts, the first thing to do is to go from a gross value in line with the market. Underestimating your principal residence, which will undergo a reduction, will only lead to a questioning of the result by the tax administration.

The second question to ask is the foundation of the practice of discounts : is the property free (not rented, not subject to a prohibition, restriction …)?

simply, are you free to decide to sell it, without constraint of occupation, without sharing the decision with another person?

If this is not the case, it is possible to practice a discount. More or less important depending on the circumstances.

The occupation of property by a tenant justifies a discount. Discount of 10-20% or even more, depending on the lease term remaining to account for the fact that the occupation of a housing underestimates its price. And the discount is even more important than the rent charged is low or box, allowing, for example strongly delist even leased assets under the 1948 Act.

Jointly-owned (indivision) ?

For the same reasons, it is possible to reduce the value of property owned in joint ownership, given the constraints to undergo, the most common is the obtention of the consent of all joint owners, both in the question of selling as for the price to ask.

Owned by an SCI?

This situation also justifies the application of a discount, the possession of the property by an SCI whose statuses can make the shares composing the capital less fluid. It is still necessary to prove that capital is not held 99.99% by one person or by a married couple taking out the same solidarity on wealth statement.

You must therefore think to highlight all items that represent an obstacle to the freedom to dispose of property.

Dismembered?

Case law is tough on when property the property is dismembered. The usufructuary must bear the full value of the property in his ISF (Wealth tax) without being allowed to practice a discount, even though, he formed the project to sell the property, it would necessarily have to seek the agreement of the bare-owners.

However, if the property is used by the usufructuary as a principal residence, it is accepted that they can demand the application of the 30% reduction provided for the main residence.

Accumulated discounts

As part of the assessment of property for the calculation of the wealth tax (ISF), the Supreme Court accepted in its judgment of 16 February 2016 that the cuts for occupation and joint ownership can cumulate (Cass. com., February 16, 2016, No. 14-23301, Jurisdata No. 2016-002772). A bargain for the taxpayers! This judgment, delivered in a general context, seems transferable to inheritance and gift taxes.

Recall of facts

The case in question concerns the assessment of undivided shares on a luxury property located in Nice including “three beautiful buildings of architectural quality with swimming pool and tennis court” and enjoying “a prime location on the city and the Bay of Nice. ” The villa in question, which previously belonged to an ancient civil society, became the joint property of partners due to the lack of registration of the company.

As part of the reorganization of the value declared to the wealth tax by one of the joint owners, the tax administration has identified three terms of comparison corresponding to sales at properties owned or joint ownership, or through a civil society . The property in question belong to the same real estate market to the extent that it is “great boutique property with caretaker’s house, pool and tennis court.”

The tax administration has agreed to apply a reduction of 20% on the value to reflect the rental condition of the house.