The real estate wealth tax (IFI), which replaces the solidarity tax on wealth (ISF), aims to tax real estate assets when their value exceeds 1.3 million euros. This tax is calculated according to a degressive scale provided for in Article 977 of the General Tax Code. The declaration of the tax on real estate wealth occurs at the same time as the declaration of the income tax, but its calculation can sometimes seem more delicate. Taxable property, tax rates and reductions… Here is all the useful information to properly declare the tax on real estate wealth.
Who is affected by IFI?
The real estate wealth tax concerns all persons who hold real estate assets with a net value of more than 1.3 million euros. This patrimony includes all immovable property, built and unbuilt buildings, outbuildings and property classified as a historic monument held by a natural person on 1 January of the tax year. It also concerns real estate rights such as usufruct, right of use or rights represented by shares in real estate companies, as well as real estate assets. The tax household taken into account consists of a person living alone (single, widowed, divorced, separated) or a couple, regardless of their situation (marriage, PACS, cohabitation) and including dependent minor children.
How to calculate your IFI?
The real estate wealth tax is calculated in relation to a progressive scale that starts at € 800,000. Note that you are only subject to real estate wealth tax from 1.3 million euros of real estate assets, but that the calculation takes into account your property from 800,000 €. The tax rate ranges from 0.5% to 1.5% of the value of the declared wealth.
This calculation is then reduced by various elements depending on the case:
– 30% of the market value of the dwelling considered as the principal residence;
– property tax;
– financial debts, such as a bank loan;
– debts resulting from repair, maintenance, improvement, construction, reconstruction or expansion work.
Note, however, that in a cohabitation situation, if everyone has a principal residence, it will be necessary to make a choice regarding the one to which the 30% abatement will apply.
How to reduce IFI?
It is possible to benefit from a discount. Indeed, assets whose value is between 1.3 and 1.4 million euros benefit from a reduction, according to the formula 17500 – (1.25% x the amount of taxable net wealth).
In addition, if you make a donation to an association or foundation recognized as being of public utility, you can obtain a reduction on the amount of your real estate wealth tax. This reduction provided for by Article 978 of the General Tax Code can go up to 75% of donations made within the limit of € 50,000.
Property taxable to the IFI
The real estate wealth tax is calculated from the assets of a tax household, composed of a single person or a couple, with or without children. Taxable property and rights include:
– buildings such as houses and apartments, main and secondary residences, as well as their outbuildings;
– undeveloped buildings such as building land or agricultural land;
– buildings under construction on 1 January of the tax year;
– buildings classified as a historical monument;
– buildings held indirectly by shares in real estate companies;
– immovable property rights (usufruct, right of use, etc.) and those which do not meet the conditions to be considered as professional property.
Unlike the solidarity tax on wealth, the real estate wealth tax only taxes real estate assets. Movable property and financial property are not affected by taxation. The following are excluded from the patrimony:
– furniture;
– works of art:
– professional real estate;
– financial investments (PEE, PEA, securities accounts, etc.);
– furnished rental properties (if they have the status “professional furnished rental”).
The IFI tax rate
The scale for calculating the IFI is as follows:
– from €0 to €800,000: 0%;
– from €800,001 to €1,300,000: 0.5%;
– from €1,300,001 to €2,570,000: 0.7%;
– from €2,570,001 to €5,000,000: 1%;
– from €5,000,000 to €10,000,000: 1.25%;
– over €10,000,000: 1.5%.
How do I make the IFI declaration?
In the same way as income tax, real estate wealth tax must be declared by the taxpayer via formNo.2042-IFI. To be sure to declare all of his real estate assets, the owner must make a fair estimate of the value of his property subject to real estate wealth tax.
The approach is different if the real estate wealth tax concerns a person who does not reside in France or an adult still attached to the tax household of his parents. In both cases, there is no income tax return, so form No.2042-IFI-COV-K must be completed.
The declaration of the real estate wealth tax takes place at the same time as the declaration of the income tax. Its filing deadline is also the same, depending on the method of declaration as well as the department of residence. It must be done online on the tax website. However, a paper declaration is possible in certain special cases: main residence without internet access, white zone, ignorance of the internet tool or first declaration.
How do I pay IFI?
The real estate wealth tax notice is sent at the same time as the income tax notice. After receipt, payment must be made by the deadline specified on the notice. Usually, non-dematerialized payments (check, cash, credit card with a tobacconist) are made before September 15 and dematerialized payments, online therefore, are made before September 20.
Amounts less than or equal to €300 can be paid by cheque, TIP SEPA, cash or credit card with an authorized “local payment” partner. Amounts over 300 € must be paid online directly on the website or the tax application.
