Real Estate Wealth Tax (IFI)

The IFI is an annual tax applied to the net value of your real estate assets located in France, applicable as soon as their total exceeds €1,300,000 on January 1st.

The tax is calculated according to a progressive scale ranging from 0.5% to 1.5%, with the taxation threshold starting at €800,000.

Below, you will find all the details, illustrated with concrete examples:

1. Who is liable for the IFI?

French tax residents

If you are a French tax resident as of January 1st, the IFI applies to your global real estate portfolio (both in France and abroad), after deducting eligible debts, subject to certain exemptions provided for by law, such as real estate used for professional purposes.

International tax treaties may limit the taxation of real estate located outside France. Each case must therefore be reviewed according to the country concerned.

Non-residents

If you are not a French tax resident, the IFI applies only to real estate assets located in France, including shares in companies to the extent that they represent French real estate assets.

New residents (“Five-year rule”)

Individuals who transfer their tax residence to France and who have not been French residents during the previous five years are liable for the IFI only on their real estate assets located in France for the following five years (up to December 31 of year N+5).

Beyond this period, the standard regime applies: the IFI is then calculated on the entire worldwide real estate portfolio. This rule, already in effect under the former wealth tax (ISF), has been maintained for the IFI.

Example:

You became a French tax resident in 2025 and were not resident between 2020 and 2024. Until December 31, 2030, you will be subject to the IFI only on your real estate assets located in France (provided the net taxable value exceeds €1.3 million).

2. Who must be included in the IFI declaration?

The household composition considered for the IFI differs from that used for income tax purposes.

The following must be declared together:

• Spouses (regardless of their marital regime);

• Partners bound by a PACS (civil union);

• Cohabiting partners in a recognized “notorious cohabitation” (effectively living together as a family);

• Minor children whose parents manage their assets legally.

The following are not automatically included:

• Adult children: even if they are part of the household for income tax purposes, they constitute their own IFI household and must file a separate declaration if their assets exceed the taxation threshold.

3. When can a couple file separate IFI declarations?

In general, spouses, PACS partners, or cohabiting partners must declare their assets jointly. A separate declaration is only possible in strictly defined situations:

• Spouses married under a separation of property regime who do not live under the same roof on January 1st;

• Spouses undergoing judicial separation or divorce, where the court has authorized separate residence as of January 1st;

• Similarly, in the event of PACS dissolution or the death of one of the partners.

A separation of property regime alone is not sufficient: an actual or court-authorized separation is also required.

4. How to determine the IFI base: what must be included and deducted

• When real estate is held directly by an individual, a 30% allowance applies to the main residence.

  However, if the residence is held through a management SCI, even one taxed under the income tax regime (IR), the tax authorities may refuse the application of this allowance if the SCI’s activity or the nature of the property does not strictly meet the required conditions.

  As a result, the 30% allowance is not automatically granted when the property is held through an SCI; it must be justified and approved on a case-by-case basis.

• A property used for professional or business purposes may be exempt from the IFI, provided the legal criteria are met.

• Debts (mortgages, acquisition loans, construction or renovation loans, etc.) outstanding as of January 1st are deductible when they meet the statutory conditions. For bullet loans (prêts in fine), a “pseudo-amortization” applies: the deductible amount is calculated as though the loan were repaid evenly over its term.

• Since 2018, a cap on deductible liabilities applies when the market value of taxable assets exceeds €5 million: the portion of deductible debts exceeding 60% of the taxable assets’ value is reduced by 50%.

5. IFI 2025 Scale

6. Examples of IFI Calculation

Example 1 : Quick IFI calculation for a portfolio of €6 000 000

Net taxable value of real estate assets as of January 1st (after debt deductions) : €6 000 000

Calculation by bracket :

• (€1 300 000 − €800 000) × 0.5 % = €2 500

• (€2 570 000 − €1 300 000) × 0.7 % = €8 890

• (€5 000 000 − €2 570 000) × 1.0 % = €24 300

• (€6 000 000 − €5 000 000) × 1.25 % = €12 500

Total IFI amount : €2 500 + €8 890 + €24 300 + €12 500 = €48 190

Alternative method — “quick” calculation for the €5–10M bracket :

IFI = P × 1.25 % − €26 810

IFI = €6 000 000 × 1.25 % − €26 810 = €48 190

Example 2 : Main residence with allowance and mortgage

• House in Cannes (main residence) valued at €3 000 000

• Outstanding mortgage balance as of January 1st : €900 000

• No other real estate assets subject to IFI

Step 1 — Apply the 30 % allowance on the main residence : €3 000 000 × 70 % = €2 100 000

Step 2 — Deduct the mortgage : €2 100 000 − €900 000 = €1 200 000 (net IFI base)

Result : €1 200 000 ≤ €1 300 000 → no IFI is due

Example 3 — New resident (“5-year rule”)

• As of 01/01/2025, you are a French tax resident, having moved in 2024. Between 2019 and 2023, you were a non-resident.

• Real estate assets : property in Nice : €2 000 000; property in Italy : €1 800 000; debt related to the Nice property : €600 000

Calculation of the IFI base : €2 000 000 − €600 000 = €1 400 000

→ The taxable threshold is exceeded, but only the property located in France is taken into account during the first five years following your arrival.

Example 4 — Separate IFI declarations for spouses

• The spouses are married under a separation of property regime and live at separate addresses as of 01/01/2025.

• Each owns a net real estate portfolio valued at €1 100 000.

Each spouse calculates the IFI only on their own assets : €1 100 000 < €1 300 000 → neither spouse is liable for the IFI.

If a joint declaration had been filed, the total taxable base would be €2 200 000, resulting in an IFI payment.

A separate declaration is only possible because both conditions are met : separation of property + separate residences.

Use our interactive IFI calculator to estimate your potential IFI.

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7. How to reduce and optimize the IFI

Donations (IFI donations, Article 978 of the French Tax Code)

It is possible to reduce the IFI through donations to charitable organizations:

• The IFI amount is reduced by 75% of the donation;

• The maximum reduction is €50,000 per year, corresponding to a donation of €66,667;

• Any excess reduction is neither refundable nor transferable to subsequent years.

This mechanism is frequently used by high-net-worth individuals, who make donations to foundations, hospitals, or scientific and social organizations.

IFI capping (75% of income)

The total IFI for the current year, combined with income tax (IR) and related taxes from the previous year, cannot exceed 75% of your worldwide income from the previous year.

If the total tax burden exceeds this 75% ceiling, the IFI is reduced by the corresponding difference.

This IFI capping mechanism is available only to French tax residents. Non-tax French residents are not eligible for this reduction.

IFI optimization through property rights separation (“démembrement de propriété”)

Property rights separation is one of the most effective legal ways to reduce the IFI. It is based on splitting ownership into usufruct and bare ownership:

• The usufructuary has the right to use the property and receive income generated
  from it;

• The bare owner holds the property without the right to use it.

For IFI purposes, a key point: the tax is payable by the usufructuary, while the bare ownership is not taxable.

For more information on optimizing IFI through property rights separation, please refer to our detailed guide.

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8. Declaration and Deadlines

• The IFI is filed at the same time as the income tax return (generally between April and June; exact dates are published annually on impots.gouv.fr).

• The IFI notice and payment are usually sent separately, around August–September.

• Non-residents and residents of Monaco file their IFI through the competent tax office (SIP NR / Menton, depending on the situation).

At Property Service Azur, our experts assist you not only in acquiring real estate but also in optimizing taxes and managing your real estate portfolio.

This article is for informational purposes only. The agency does not provide individual tax calculations for those who are not clients of Property Service Azur.