The recently approved tax reform adopted by the Assemblée nationale of France introduces a significant transformation in the taxation of private capital. Under the 2026 budget amendments, the current IFI tax will be replaced by a new mechanism, the «tax on unproductive wealth» (Impôt sur la fortune improductive (IFI-i). This decision has drawn considerable attention, particularly among owners of high-end real estate and affluent investors.
Expanded base and a single rate
A central change is the broadening of asset categories subject to taxation. The new tax applies not only to real estate not used for professional purposes but also to artworks, yachts, aircraft, jewellery, cryptocurrencies, and selected financial assets, including certain life-insurance contracts, when they do not generate income or are considered «non-productive» within the economy.
Life-insurance contracts in «fonds euros» are included if they are not actively invested in the real economy.
The taxation threshold, initially discussed at 2 million €, has been confirmed at the existing level of 1.3 million €, identical to the current IFI.
The progressive tax scale ranging from 0.5 % to 1.5 % will be replaced by a uniform 1 % rate applied to the portion of value exceeding the threshold.
Special status of primary (or sole) residence
The reform provides specific relief for a primary or sole residence. Up to 1 million € may be deducted from the taxable base for such a property, in addition to the existing 30 % reduction applied to its assessed value.
Combined, these mechanisms can significantly reduce or fully eliminate the tax burden on a high-value residence, provided the criteria are met.
Benefit for luxury property owners
For owners of premium real estate, the new model may offer a distinct advantage. When a substantial portion of wealth is concentrated in a primary residence, the property may become entirely exempt from taxation through the combined effect of the 30 % valuation reduction and the 1 million € deduction. According to expert assessments, a residence valued at up to approximately 3.2 million € may, in certain cases, fall outside the taxable scope.
At the same time, the overall balance changes. While the previous system primarily taxed real estate not linked to professional activity, the new framework designates the main residence as a protected asset, shifting the tax burden toward other categories of wealth.
Redistribution of the tax burden
The introduction of a unified 1 % rate may be more favourable owners of substantial asset portfolios (for example, above 5 million €), since the previous scale reached up to 1.5 %.
Owners of mid-range wealth (around 1.3–2 million €) may face a higher burden as a result of the expanded taxable base.
Crucially, the new tax base includes assets previously excluded from IFI, such as cryptocurrencies, collectible items, and certain life-insurance contracts. This significantly changes the structure of taxable wealthfor many private investors.
Practical guidance for the real estate market and clients
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Owners of luxury properties, particularly those used as primary residences, should evaluate whether their property qualifies for the available relief and whether full exemption is possible.
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Investors with diversified holdings (real estate, financial instruments, collections) should reassess their portfolio structure, as reallocating certain assets into «productive» categories may prove advantageous under the new regime.
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Real estate agencies should inform clients that a primary residence now benefits from protected status under the revised model, which may strengthen advisory arguments when working with homeowners.
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Legal and tax expertise becomes essential to properly classify assets as non-professional or non-productive and to ensure accurate documentation.
Conclusion
The reform of the IFI and the introduction of the tax on unproductive wealth mark an important development in French tax policy. For high-net-worth individuals, this shift represents both an obligation and an opportunity to reassess asset allocation, refine wealth-management strategies, and make full use of available exemptions and protective mechanisms. For the real estate market, it creates an opportunity to reinforce the value proposition of premium properties and enhance transparency in client advisory services.
