Moving to France? Know the Real Estate Wealth Tax

France does not impose a traditional net wealth tax on all assets anymore—but it does tax real estate wealth. If you’re planning to move to France with substantial property holdings, understanding the Impôt sur la Fortune Immobilière (IFI) is essential.

In this episode, we explain who is affected, how the tax works, and what new residents should know.

🏠 What Is IFI?

The Impôt sur la Fortune Immobilière (IFI) is a wealth tax that applies only to real estate assets.

Unlike the former wealth tax (ISF), IFI does not include financial assets, such as:

• Shares and investment portfolios

• Bonds

• Cash or bank deposits

Only real estate wealth is taken into account.

The rules are contained in the Code général des impôts.

📊 Thresholds and Tax Rates

IFI applies once the net value of real estate assets exceeds €1.3 million.

However, the progressive tax scale begins at €800,000, with rates ranging from:

• 0.5%

• Up to 1.5% on the highest brackets.

The tax is calculated on net taxable real estate wealth.

🧾 What Assets Are Included?

IFI covers real estate held:

• Directly (e.g., personal property ownership)

• Indirectly through companies or structures

• Through certain real estate investment vehicles

Financial investments are generally excluded unless they represent indirect real estate exposure.

💳 Deductible Debts

Debts relating to taxable real estate may be deducted when calculating the net value of assets.

Examples may include:

• Property acquisition loans

• Renovation financing

• Certain property-related liabilities

However, anti-abuse rules may limit the deductibility of some arrangements.

🌍 What About Foreign Property?

For French tax residents, IFI can apply to worldwide real estate assets.

However, new arrivals may benefit from a temporary exemption under Article 964 of the French Tax Code, sometimes referred to as the five-year impatriate rule.

During this period, foreign real estate may be excluded from the IFI calculation.

🎯 Key Takeaway

For individuals relocating to France:

• IFI applies only to real estate wealth

• The tax threshold begins at €1.3 million

• Rates range from 0.5% to 1.5%

• Debts may reduce the taxable base

• Foreign property may be temporarily excluded for new residents

Real estate planning is therefore a crucial part of pre-arrival tax structuring.