€1.3M
The IFI threshold: net taxable immoveable wealth at 1 January must exceed €1,300,000 for the tax to apply. The entire patrimony is taxed once the threshold is crossed, starting from €800,000.
5 yrs
New arrivals who have been domiciled abroad for at least five consecutive years are only taxed on French-situs assets for the first five years after arriving in France — regardless of their worldwide immoveable wealth.
75%
The plafonnement cap: the combined total of IFI and income tax due cannot exceed 75% of the prior year's net income. Any excess reduces the IFI — it cannot generate a refund of income tax.

What Is the IFI and Who Does It Apply To?

The IFI — impôt sur la fortune immobilière — is an annual French wealth tax that applies exclusively to immoveable assets (real property and related rights). It replaced the broader ISF (impôt de solidarité sur la fortune) in 2018 when France restructured its wealth tax to focus solely on real estate rather than all asset classes. Financial assets — bank accounts, share portfolios, life insurance, private equity — are no longer subject to French wealth tax (CGI Art. 964–982).

The IFI is assessed annually, with all values and eligibility determined at 1 January of each tax year. Changes in asset values or ownership during the year after that date do not affect the current year's IFI assessment.

Who Is Taxable: Residents, Non-Residents, and the Five-Year Rule

French Tax Residents: Worldwide Immoveable Assets

Individuals who are fiscally domiciled in France — applying the criteria of CGI Art. 4 B, which include having one's principal home, principal place of professional activity, or centre of economic interests in France — are taxable on the entire value of their immoveable assets, whether those assets are located in France or abroad (CGI Art. 964). A British expat who has moved their tax residence to France is taxable on a UK investment property, a Spanish holiday villa, and French rental properties all simultaneously. Where the same foreign asset is also subject to a wealth-equivalent tax in another country, the foreign tax paid can be credited against the French IFI under CGI Art. 980 — but France has no IFI-specific bilateral treaty with the UK, US, Australia, or most other countries, meaning double taxation on the same foreign asset is a genuine risk.

Non-Residents: French Assets Only

Individuals whose fiscal domicile is outside France are taxable only on their French-situs immoveable assets: direct property ownership, French usufruit rights, French long-term leases, and — critically — shares or parts in any company (whether French or foreign) to the extent that company's value is attributable to French real estate (CGI Art. 964). A British resident who owns a Paris apartment and holds shares in an SCI that owns a French farmhouse is taxable on both — the apartment directly, and the SCI shares to the fraction of their value that represents French property. Non-residents are not taxable on foreign property, even if held through French legal entities.

The Five-Year Relief for New Arrivals

A specific relief applies to individuals who move to France after having been domiciled outside France for at least five consecutive years. For the first five years following their installation in France, they are taxable only on French-situs immoveable assets — as if they were still non-residents — and their foreign immoveable assets are excluded from the IFI base (CGI Art. 964). The five-year period runs to 31 December of the fifth year following the year of arrival.

Example: The Five-Year New Arrival Relief

A British executive transfers his fiscal domicile to Paris on 15 March 2023. He owns a London house worth £2 million and a Paris apartment worth €900,000.

IFI years 2024 to 2028: taxed only on French assets (the Paris apartment)
London house: excluded from IFI base throughout the relief period
Relief expires: 31 December 2028
IFI year 2029 onwards: taxed on both Paris apartment AND London house (full worldwide base)

The relief is automatic — no application is required. Planning the timing of a move to France to maximise use of the five-year window, and restructuring foreign property holdings before the window closes, are both legitimate considerations that should be addressed before the relief period ends.

The Foyer Fiscal: IFI Is a Household Tax

The IFI is assessed at the level of the foyer fiscal: married couples file jointly regardless of their matrimonial regime; PACS partners file jointly; cohabitants (concubins notoires) also file jointly. Assets belonging to minor children are included in the parents' IFI base. The foyer's composition is assessed at 1 January of the tax year.

What Assets Are Taxable: Direct Property and Company Shares

Direct Immoveable Property

All built and unbuilt immoveable property enters the IFI base: residential and commercial buildings, land, buildings under construction (taxed at their state of completion as of 1 January), agricultural land, and all real property rights including usufruit rights, long-term leases (baux à construction), and rights under rent-to-buy agreements.

Company Shares: The Fraction-of-Value Approach

Where property is held through a company rather than directly, the shares are taxable to the extent they represent real estate value. The calculation proceeds in two steps: first, determine the company's total asset value; second, apply the ratio of immoveable assets to total assets to the share value held by the taxpayer (CGI Art. 965, 2°). This calculation applies at every level of corporate chain.

Example: IFI on Company Shares — Basic Calculation

Monsieur X holds 50% of the shares of company A, which has a net asset value of €100,000. The company's total gross assets are €160,000, of which €40,000 is an apartment.

Monsieur X's share value: 50% × €100,000 = €50,000
Immoveable ratio (coefficient immobilier): €40,000 ÷ €160,000 = 25%
Taxable IFI value: €50,000 × 25% = €12,500

Two Important Exclusions from the Company Share Calculation

Immoveable property used in the company's operational activity is excluded from the taxable fraction. If a company owns the building in which it operates its own business, that building is not counted in the immoveable ratio for IFI purposes. The property must be used by the company (or a group company it controls) for its own commercial, industrial, artisanal, agricultural, or professional activity (CGI Art. 965).

Participations below 10% in operational companies are entirely excluded from the IFI base. Where a taxpayer holds less than 10% of the capital and voting rights of a company carrying on an operational activity (not a company whose only activity is managing its own real estate portfolio), those shares generate no IFI liability regardless of the underlying property value (CGI Art. 965, 2°).

Valuing Assets: Market Value and the Residence Abatement

IFI assets are valued at their valeur vénale — the price that could be obtained on the open market given the asset's actual state. No standard discount is permitted for démembrement or illiquidity (Cass. com. 20-3-2007 n° 05-16.751 F-PB).

One standard abatement applies: the principal residence benefits from a 30% abatement on its market value for IFI purposes (CGI Art. 973). The abatement applies to the property that is the taxpayer's habitual and effective residence for the majority of the year. It does not apply to secondary residences, investment properties, or properties held through an SCI.

The SCI and the 30% Abatement — A Common Mistake

Many expat families in France hold their main home through an SCI for succession or matrimonial planning purposes. This is legally valid but has a specific IFI consequence: the 30% principal residence abatement is only available to direct owners of the property. Shareholders of an SCI — even those who live in the property — cannot claim the abatement when declaring the value of their SCI shares for IFI. Structuring the main home through an SCI rather than direct ownership costs the family the 30% abatement on the full property value every year the property is IFI-taxable.

The IFI Rate Scale and How to Calculate Your Liability

The IFI applies from €1,300,000 of net taxable patrimony, but the calculation starts at €800,000 — the first €800,000 is taxed at 0%. A décote (smoothing relief) applies where the net taxable patrimony is between €1,300,000 and €1,400,000, reducing the IFI by the formula: €17,500 − (1.25% × P), preventing a sharp cliff at the threshold (CGI Art. 977).

Net taxable patrimony (fraction)Rate
Up to €800,0000%
€800,001 to €1,300,0000.50%
€1,300,001 to €2,570,0000.70%
€2,570,001 to €5,000,0001.00%
€5,000,001 to €10,000,0001.25%
Over €10,000,0001.50%
Example: IFI Calculation on a €6.8 Million Net Taxable Patrimony
On €800,000 at 0% = €0
On €500,000 (€800,001–€1,300,000) at 0.5% = €2,500
On €1,270,000 (€1,300,001–€2,570,000) at 0.7% = €8,890
On €2,430,000 (€2,570,001–€5,000,000) at 1% = €24,300
On €1,800,000 (€5,000,001–€6,800,000) at 1.25% = €22,500
Total IFI: €58,190

IFI for donations to qualifying public interest organisations can be reduced by 75% of the donation amount, capped at €50,000 per year. Donations that benefit from this IFI reduction cannot simultaneously give rise to an income tax reduction for the same amount (CGI Art. 978).

Debt Deduction: What Can and Cannot Be Deducted

The IFI is assessed on the net taxable patrimony. The list of deductible debts is closed (CGI Art. 974, I):

  • Acquisition costs of taxable immoveable property (mortgages and purchase loans)
  • Repair and maintenance costs effectively incurred by the owner
  • Improvement, construction, reconstruction, or enlargement costs
  • Property taxes (taxe foncière and equivalent) not yet paid at 1 January, where the liability arose at or before 1 January
  • Acquisition costs of taxable company shares, pro-rated to the taxable immoveable fraction

Debts relating to fully exempt assets are not deductible. A mortgage on a professional property that qualifies for the biens professionnels exemption generates no IFI deduction.

Anti-Abuse Rules on Family and Related-Party Loans

The following loans are in principle not deductible (CGI Art. 974, III): loans contracted from the taxpayer's own foyer fiscal; loans contracted from close family members; and loans contracted from a company controlled by the taxpayer's family group. However, these debts can be deducted if the taxpayer demonstrates that the loan terms are genuinely normal — that interest rates reflect market rates, that repayments are being made on schedule, and that the loan had a real economic purpose.

The In Fine Loan Deduction Limit

Where a loan is structured as a bullet repayment (prêt in fine) — with interest payable periodically but the principal repaid in full at the end — the deductible amount is limited to the theoretical amortisation that would have been repaid if the loan had been structured as a standard annuity loan (CGI Art. 974, II).

Example: In Fine Loan Deduction Cap

A taxpayer finances a property with a €250,000 in fine loan for ten years (capital to be repaid in full on 1 January 2029). The IFI base date is 1 January 2023 — four years into the loan.

Full principal: €250,000
Deemed amortised: €250,000 × (4 ÷ 10) = €100,000
Maximum deductible debt: €250,000 − €100,000 = €150,000

The remaining €100,000 cannot be deducted, even though the loan is entirely outstanding and will be repaid in full at maturity.

The High-Value Patrimony Debt Cap

For portfolios where the net taxable value exceeds €5 million and the total debts exceed 60% of that value, the excess debt is only deductible up to 50% of the excess. This caps the debt deduction to prevent highly leveraged real estate portfolios generating no IFI liability (CGI Art. 974). The cap does not apply to debts contracted before 1 January 2018.

The 75% Cap: IFI Cannot Exceed 75% of Your Income

The IFI is capped so that the combined total of IFI plus income tax (including social charges) for the current year cannot exceed 75% of the taxpayer's net income for the previous year (CGI Art. 979). If the combined figure would exceed 75%, the excess is deducted from the IFI — it cannot generate a refund of income tax already paid. For the plafonnement calculation, income is measured broadly: it includes all French and foreign income regardless of whether it was taxed in France, all capital gains (calculated without duration abatements), and even income that is technically exempt from income tax.

ℹ️
The Plafonnement and Low-Income Wealthy Owners

The plafonnement is most valuable to taxpayers who have significant real estate wealth but relatively modest annual income — for example, a retired property owner who lives off a modest pension while holding a large portfolio of investment properties generating low or deferred returns. Where the properties are held through a translucent company (SCI, société civile) and the company retains rather than distributes its profits, the Cour de cassation has confirmed that retained undistributed profits are nonetheless counted as income for plafonnement purposes (Cass. com. 28-3-2019 n° 17-23.671 FS-PB). Structuring to maximise the plafonnement benefit while managing the income attribution correctly is a specialist planning exercise.

The Professional Asset Exemption

The IFI's most significant relief for business owners exempts immoveable assets that are used in the taxpayer's own professional activity from the taxable base. Two regimes apply depending on the company's tax treatment.

Partners in Translucent Companies (IR)

Where a partner in a société de personnes personally owns real property that they make available to the company for its operational activity, and the partner exercises their principal professional activity within that company, those assets are exempt from IFI to the extent of the partner's interest in the company (CGI Art. 975, II).

Directing Shareholders of IS Companies

Where a directing shareholder of a company subject to corporation tax (IS) personally owns property placed at the company's disposal for its business, those assets can be exempt under three cumulative conditions (CGI Art. 975, III):

  1. The function must be effectively exercised — the directorship cannot be nominal.
  2. The function must be remunerated at a normal market rate — compensation matching what comparable roles receive in similar businesses.
  3. The directorial remuneration must represent more than half of the director's total professional income — professional income meaning earned income, excluding investment income, pensions, and similar non-professional receipts.

For minority and equal-level managers of SARLs and directors of SAs, a minimum 25% holding in the company's voting rights is required (calculated including the holdings of the director's extended family group up to one level of interposition). SARL gérants majoritaires and their equivalents are exempt from the 25% minimum.

Example: Professional Asset Exemption for an IS Company Director

M. X holds 80% of the voting rights of a SAS that he manages. He and his wife jointly own 100% of an SCI that holds an office building worth €1 million (40% of the SCI's total assets of €2.5 million). The SCI leases the building to the SAS. The SCI's net assets after debts are €2 million.

SCI shares held by M. X and wife: 100% × €2,000,000 = €2,000,000 gross
IFI fraction of SCI (without exemption): 40% × €2,000,000 = €800,000
Professional exemption: M. X's voting rights in SAS = 80%
Exempt fraction: 80% × (40% × €2,000,000) = €640,000
Remaining taxable: €800,000 − €640,000 = €160,000

Filing the IFI Declaration

Taxpayers whose net taxable patrimony exceeds €1,300,000 at 1 January must file an IFI declaration on form 2042-IFI, which is an annex to the standard income tax return (form 2042). The IFI declaration and income tax return are filed together by the standard income tax deadline — in practice, the online deadline in May or June depending on the département. Non-residents who have no French income tax filing obligation but who have IFI liability must nonetheless file the IFI declaration by the standard deadline (CGI Art. 982).

No supporting documents need be attached to the declaration, but the taxpayer must be able to substantiate all valuations and debt deductions if the tax authority requests them. The IFI is collected by way of a tax notice (rôle), usually sent in August with a mid-September payment deadline. Where the IFI exceeds €300, electronic payment is required. The statute of limitations is six years for non-filing or omission and three years for complete declarations.

Key Points: IFI for Non-Residents and Expats
The IFI applies to all natural persons whose net taxable immoveable wealth at 1 January exceeds €1,300,000 — residents on worldwide assets, non-residents only on French-situs assets (CGI Art. 964). Financial assets (bank accounts, shares, life insurance, private equity) are not in scope.
New arrivals who have been domiciled abroad for at least five consecutive years are taxed only on French assets for their first five years in France — a substantial relief running to 31 December of the fifth year following the year of arrival. Planning the timing of a move and restructuring foreign holdings before the window closes are both legitimate considerations.
Company shares are taxable to the fraction of their value attributable to French real property — even shares in foreign companies if the underlying French real estate represents a significant share of the company's assets. Two key exclusions: (1) real estate used in the company's own operational activity; (2) holdings below 10% in operational companies (CGI Art. 965, 2°).
Direct property is valued at market value on 1 January. The principal residence benefits from a 30% abatement — but only for direct owners, not for shareholders of an SCI that holds the property. This is one of the most common and costly misconceptions for expat families holding their home through an SCI (CGI Art. 973).
The deductible debt list is closed: acquisition loans, maintenance and repair costs, improvement works, applicable property taxes, and share acquisition costs pro-rated to the taxable fraction. Family loans, in fine loans (with a deduction cap), and high-leverage debt above 60% of a €5M+ patrimony are subject to specific anti-abuse restrictions (CGI Art. 974).
The 75% plafonnement cap prevents the combined IFI and income tax charge from exceeding 75% of the prior year's net income. It is particularly useful for asset-rich, income-modest taxpayers — but retained company profits count as income for the cap calculation even if not distributed (Cass. com. 28-3-2019 n° 17-23.671) (CGI Art. 979).
The professional asset exemption removes qualifying real property from the IFI base where the taxpayer directs the company that uses the property, is remunerated at a normal market rate, and earns more than half their professional income from that directorship. A minimum 25% voting rights holding is required for minority managers and directors (CGI Art. 975).
France has no IFI-specific bilateral tax treaties with the UK, US, Australia, or most other countries. Foreign property tax credits are available against French IFI under CGI Art. 980, but double taxation on the same foreign asset is a genuine risk for residents with foreign real estate. Specialist cross-border tax advice is essential.
Do You Have a French IFI Liability?

Whether you own French property directly, through an SCI, or through a company structure — as a resident or non-resident — our guides cover the complete French wealth tax framework. Understanding your position before 1 January each year is the key to managing your IFI exposure.

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This article is provided for general information and educational purposes only. It does not constitute legal or tax advice. The IFI rules are complex and their application depends on the specific composition and value of the taxpayer's patrimony, their domicile, applicable bilateral conventions, and the detailed conditions of available exemptions. Non-residents and expats with cross-border situations require specialist advice in both France and their country of domicile.