EXPLAINED: France’s property wealth tax 2024

Residents of France who own property (in France or elsewhere in the world) valued over a set threshold must pay an annual extra tax. We look at how this tax is calculated and who has to pay

it.

The impôt sur la fortune immobilière (IFI), or real estate wealth tax, is assessed along with income tax for residents in France. It is mandatory if the net worth of your property/properties

is above €1.3 million after a 30% reduction for the value of the household’s main home.

It was introduced in 2018 to replace the now defunct impôt de solidarité sur la fortune (ISF), or wealth tax, which was taxed on all global wealth including cars, property and jewellery. 

The IFI is levied annually, and since both the tax thresholds and property values are subject to changes, homeowners need to pay close attention to these values if they are eligible to pay

or on the threshold of paying this tax

Residents with property worth over €1.3m on January 1, 2024, must declare the value of their property in their tax space on impots.gouv.fr before the income tax deadline in their department.

Read more: What are the deadlines for French tax returns in 2024? 

This value can be an estimate informed by the tax authorities’ online tool, sales information, or an evaluation by an estate agent or a chartered property surveyor.

Note that in case of a disputed evaluation, you will be required to justify the value you entered.

The IFI is a progressive tax with an allowance for the first €800,000, applied in 2024 as follows:

The thresholds apply to all property and real estate rights held directly and indirectly by members of a household on January 1, 2024.

Apart from land and buildings, IFI can also apply to shares related to investment in real estate, or, if of a mixed nature, in proportion to the investment in real estate.

Read more: Rise in property wealth tax inspections on homeowners in France

Shares in companies whose main activity is holding real estate are also concerned. 

As for shares in other companies owning property (where this is not their main purpose), the situation is more complex though they are often exempt if the building is directly used by the

firm for its business or if you own less than 10% of shares.

Buildings you use for your own work are not included. Furnished properties rented out ‘professionally’ are also exempt.

If you think the assets minus property-related liabilities of your household exceeded the threshold, it is your responsibility to make a declaration. 

Relevant liabilities include mortgage debt, property taxes and other outstanding debts related to taxable properties. 

The IFI is entered in step 3 of the online declaration by checking the box ‘Impôt sur la fortune immobilière’ or on paper form 2042-IFI.

The payment date for the IFI is September 16, 2024. All amounts over €300 must be paid online.

Note, however, that the IFI cannot be paid on a monthly basis and late payment can incur a 10% surcharge.

Newcomers to France have special treatment and are not subjected to wealth tax on their property abroad for the first five years after they move.