IFI calculation: Complete method and valuation rules
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Calculate your real estate wealth tax
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The Impôt sur la Fortune Immobilière (IFI – tax on real estate wealth) applies to taxpayers whose net taxable real estate assets exceed the tax threshold of 1.3 million euros on January 1 of the tax year. The IFI calculation requires an accurate valuation of your real estate assets and the correct application of deduction rules, particularly concerning deductible debts. This approach directly determines the amount of your tax liability, and may be subject to an IFI tax audit by the tax authorities. Understanding the calculation mechanisms will enable you to optimize your tax return in full compliance with the law. The IFI calculation is based on three distinct steps: valuing your real estate assets at their market value on January 1, deducting the debts allowed in connection with these assets, and then applying the progressive scale to your net taxable assets. This methodology is applied as soon as your real estate assets exceed the threshold of 1.3 million euros, taking into account all assets held directly or indirectly, in France or abroad. Valuation is the first step in the IFI calculation. You need to estimate the real market value of each property on January 1, i.e. the price that could be obtained from a sale under normal market conditions. This estimate applies to your main residence, second homes, land, rental properties and shares in property companies. Valuation is carried out by comparison with similar properties, by capitalization of rental income, or by professional appraisal to justify your estimate in the event of an inspection. For your principal residence, you benefit from an automatic 30% allowance on its market value, applicable only to your actual and usual principal residence. Shares in non-trading property companies (SCI), shares in companies with a preponderance of real estate assets and shares in real estate investment trusts (OPCI) are included in the IFI calculation in proportion to your percentage holding in the value of the real estate assets held by these structures. After valuing your assets, you can deduct certain debts to obtain your net taxable assets. These deductions directly reduce your tax base, and therefore the amount of your IFI tax return. The tax authorities impose strict limits on the debts that can be deducted. You can deduct loans taken out for the acquisition, construction, repair or improvement of taxable property. The basis for deduction is the outstanding principal on January 1. Maintenance and repair expenses paid but not yet paid on January 1 are also deductible. Taxes due on property, such as property tax, are deductible if they remain unpaid at January 1. Debts incurred for the acquisition of shares in SCIs or property companies can be deducted in proportion to the value of the taxable property assets. Since 2018, a capping mechanism limits the deduction of debts for certain properties. For properties not rented out or made available free of charge, debts are deductible up to 50% of their value. On the other hand, property that is rented out or constitutes your principal residence escapes this capping and allows you to deduct the corresponding debts in full. Once your net taxable assets have been determined, you apply the progressive tax scale in brackets. There are six brackets, with rates ranging from 0% to 1.5%. The calculation is carried out slice by slice, as for income tax, which means that only the fraction of wealth in each slice is taxed at the corresponding rate. The progressive scale of the IFI comprises six tax brackets: For net taxable assets of €2 million, the IFI is €7,400. If your net taxable assets are between 1.3 and 1.4 million euros, you benefit from a discount. This reduction avoids a sudden threshold effect when crossing the tax threshold. The discount is calculated as follows: 17,500 – [1.25% × (net taxable assets – 1,300,000)]. For assets worth €1.35 million, the calculation is as follows: the theoretical IFI on the taxable portion of €50,000 (between €1.3 and €1.35 million) is €250 (€50,000 × 0.5%). The applicable discount is 17,500 – (1.25% × 50,000) = 17,500 – 625 = 16,875 euros. As this discount is higher than the calculated tax, no IFI is due. The discount decreases progressively until it is cancelled at 1.4 million euros of net taxable assets. Certain situations require specific IFI calculations. In the case of dismembered property, the usufructuary declares full ownership, while the bare owner declares nothing, in accordance witharticle 964 of the CGI. Real estate used for your main professional activity is totally exempt, subject to strict conditions, as are certain shares in operating companies, via the Dutreil pact. Non-resident taxpayers continue to be taxed on their French property according to the same calculation rules. Real estate used for your main professional activity is exempt from the IFI. This exemption applies if you actually carry on your profession in these premises and derive most of your income from them. The conditions for exemption are strict, and often require the assistance of a specialized tax advisor. Taxpayers residing abroad remain liable to the IFI on their real estate assets located in France, according to the same calculation rules. Beyond the strict calculation of the IFI, several asset optimization strategies can legally reduce your tax base. These schemes (gifts with usufruct reserve, conversion of assets into business assets, investments in certain exempt assets) require an in-depth analysis of your situation and the support of a specialized tax advisor. The most common errors in the IFI calculation concern the under-valuation of real estate assets, the omission of assets held indirectly via companies (SCI, companies with a preponderance of real estate assets), and the deduction of debts that are not allowed or insufficiently justified. Each debt deducted must be supported by documentary evidence: loan contract, payment schedule and bank statements. The complexity of the IFI calculation often justifies the use of a tax lawyer to help you evaluate your assets, identify applicable deductions and optimize your tax return. This expertise prevents costly errors and makes your situation more secure when dealing with the tax authorities. This section answers the main questions about calculating the IFI and valuing real estate assets, to help you understand your tax obligations and optimize your tax return. The Impôt sur la Fortune Immobilière (IFI) is an annual tax applicable to net real estate assets in excess of 1.3 million euros. The complete calculation method consists of valuing all your real estate assets (principal residence, rental properties, shares in SCIs, etc.) on January 1 of the tax year, then deducting the deductible debts associated with these assets. The result is the tax base, to which a progressive scale of tax brackets is applied, ranging from 0.5% to 1.5%. There are four main steps in calculating the IFI: first, identify all your taxable properties and their market value on January 1. Secondly, identify and value deductible debts linked to these properties (mortgages, works, etc.). Thirdly, calculate your net taxable assets by subtracting debts from assets. Finally, apply the progressive scale of the IFI to your net assets to determine the amount of tax due. A deduction of 30% is automatically applied to the principal residence. Real estate assets must be valued for the IFI at market value, i.e. the price at which the property could be sold under normal market conditions. For rented properties, you can refer to comparable transactions or call in an expert. Principal residences benefit from a 30% allowance. SCI shares are valued in proportion to the value of the real estate held by the company. The tax authorities may contest a manifestly undervalued valuation. All property and real estate rights held directly or indirectly are taken into account: primary and secondary residences, rental properties, building land, properties under construction, shares in SCI or SCPI real estate investment trusts. Real estate held through companies is also included, in proportion to your shareholding. Excluded, however, are properties used for the main business activity (under certain conditions), woods and forests (with partial exemption), and historic monuments open to the public. Several deductions are possible to reduce the IFI tax base. Deductible debts include: loans taken out for the acquisition, construction or work on taxable assets, taxes due on the assets (property tax), expenditure on improvement work, and acquisition expenses paid but not yet settled on January 1. Note that only debts existing on January 1 and directly linked to taxable assets are deductible. A specific ceiling applies to debts payable at maturity. In the event of a tax reassessment on your IFI, you have several options. First of all, respond to the rectification proposal within the allotted time, providing supporting documents and arguments. If the disagreement persists, you can refer the matter to the departmental tax commission or to the departmental contact person. If all else fails, you can appeal to the administrative court. The assistance of a specialized tax lawyer is highly recommended to maximize your chances of success and effectively defend your interests against the tax authorities. What is the IFI calculation?
Valuation of taxable real estate assets
Recognized valuation methods
Indirectly held real estate
Deductions applicable to the IFI calculation
Deductible debts related to taxable assets
Limits on deductible debts
Application of the progressive IFI scale
Tax brackets and rates 2024
Discount for assets close to the threshold
Special cases and complex situations
Business assets and exemptions
Non-resident taxpayers
Legal optimization of IFI calculation
Common calculation errors to avoid
Professional assistance for your IFI calculation
Frequently asked questions
What is the IFI and how does the complete calculation method work?
How do I calculate the IFI?
What are the rules for valuing real estate assets for the IFI?
Which assets are taken into account when calculating the IFI?
What deductions can be applied when calculating the IFI?
How do I contest an IFI tax reassessment?
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