IFI (French real estate wealth tax) and tax reassessments: everything you need to know

The IFI, introduced in 2018 to replace the ISF (wealth tax), targets exclusively the net value of a taxpayer’s real estate assets.

• Who is liable? Any individual resident in France holding net taxable real estate assets exceeding €1.3 million at 1 January of the tax year. Non-residents are taxable on their property located in France.
• Which assets are included? The IFI covers all real estate assets and rights: buildings, building land, shares in an SCI (property-holding company), and even certain life insurance policies with real estate underlyings.
• Which assets are excluded? Business assets and certain dwellings let under specific regimes may be excluded.

The calculation is based on net taxable value: the gross value of the assets less deductible debts (loans, works, etc.). A progressive scale applies, with rates ranging from 0.5% to 1.5%. The IFI must be declared together with income tax using a specific form. Accuracy is essential: any error may lead to a tax audit.

Undervaluing one’s real estate assets to reduce IFI may seem tempting, but it exposes the taxpayer to significant penalties. Points to watch include:

• The use of unsuitable comparables.
• Failure to take into account up-to-date market value.

Shares in an SCI or properties located abroad are often overlooked. Yet they fall within the IFI base where the relevant tax residence rules make them taxable.

The rules governing deductions (loans, works) are strict. The most common mistakes:

• Deducting ineligible debts.
• Failing to keep adequate supporting documents.

A competent professional can provide an accurate and documented valuation of your properties, an essential basis for avoiding any tax dispute.

• Be thorough and accurate in your return.
• Keep solid evidence for each deduction or calculation.
• The rules may change: keeping informed and planning ahead is crucial.

Take the time to understand the points raised by the tax authorities: this will enable you to respond appropriately. A tax lawyer or expert adviser can be a valuable ally in preparing a reasoned response or negotiating a favourable outcome. If no amicable solution is found, it may be necessary to take the matter to court.

Which assets are excluded from the IFI?

Business assets, certain financial investments, and dwellings let under specific conditions.

Can I challenge a tax valuation?

Yes, by providing additional evidence or by requesting a second valuation.

How does the IFI apply to non-residents?

They are taxable on their property located in France.

How long can the tax authorities audit my return?

Up to three years after the tax year.

Do late returns increase the risk of an audit?

Absolutely. A late return often attracts the attention of the tax authorities.