French wealth tax return (IFI)
Since 1 January 2018, the wealth tax in France is based solely on real estate assets. Tax households with net taxable real estate assets in excess of EUR 1.3 million on 1 January of the tax year are subject to this tax.
The real estate wealth tax (IFI) and tax residency
🡪 If you are tax resident in France, your taxable assets include : all real estate assets and rights in France and abroad, whether held directly or indirectly (i.e. via any type of legal structure such as a company, etc.)
🡪 If you are not tax resident in France and, subject to any tax treaties, your taxable assets include:
- Real estate assets and rights located in France;
- Units or shares held in real estate companies that hold real estate in France;
- Units or shares held in real estate companies that hold real estate in France and abroad up to the limit of the assets and rights held in France.
Exception in the event of a transfer of tax residency to France. Under certain conditions, if you transfer your tax residency to France and have been tax resident abroad for the previous five calendar years, you are only taxable on real estate assets and rights held in France. This exception applies until 31 December in the fifth year following your transfer of tax residency to France. After this time, you are taxable on your worldwide assets in accordance with the normal rules.
French wealth tax return :
Real estate wealth tax (IFI) return Taxable assets
The real estate wealth tax (IFI) is calculated on the basis of the net value of your real estate assets on 1 January of the tax year (value date) Taxable assets include:
- Houses, apartments and any outbuildings (garages, parking spaces, cellars) for personal use or rented to others;
- Buildings classified as historic monuments;
- Property under construction on 1 January of the tax year;
- Undeveloped property such as buildable land, agricultural land, etc.;
- Properties or fractions of properties held indirectly via shares and units in companies;
- Real estate assets and rights that do not fulfil the conditions for business assets.
Some assets are fully or partially exempt, such as business assets, woods and forests, rural assets let on long-term leases, etc. The value of your main residence may also be eligible for a flat-rate reduction of 30%, providing it is not held via a real estate investment company (SCI).
Real estate wealth tax (IFI) return Deductible debt
Deductible debt must comply with three criteria:
It must exist on 1 January of the tax year;
It must be the personal liability of a member of the tax household;
It must relate to the taxable assets.
Deductible debt must relate to expenditure in connection with the acquisition, improvement, reconstruction, extension or maintenance of a property, or to direct real estate taxes such as rates. Certain types of debt are not eligible for deduction, even if they comply with these three conditions.
Find out more: https://www.impots.gouv.fr/portail/particulier/patrimoine-taxable-lifi
How can we help you ?
The missions we can offer you:
Drafting of a tax study: with simulation of your tax obligations in France ; a key solution to secure your installation in France in order to avoid unfortunate situations, such as delays or errors in your tax returns.
Follow-up of your tax returns in France: income tax, real estate wealth tax, rental income
French wealth tax return : security and optimization
we can help regularise your situation with regards to any missing or late returns
calculating the tax due
When to submit a real estate wealth tax (IFI) return
Form no. 2042-IFI of the French tax authorities must be submitted at the same time and by the same date as your income tax return. If you do not have any income to declare, a separate return must be submitted for the real estate wealth tax (IFI) using form no. 2042-IFI-COV-K.
Roche & Cie can assist with establishing the value of your taxable assets and deductible debt, preparing the relevant returns and calculating the tax due, etc.
Similarly, we can help regularise your situation with regards to any missing or late returns.
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