Residents of France who own property (in France or elsewhere in the world) valued over a set threshold must declare to pay 2024’s French property wealth tax along with their income tax.
This is an annually levied tax and raises the question of who sets the valuation of your property and how - we explain.
The impôt sur la fortune immobilière (IFI), or real estate wealth tax, is assessed along with income taxes for residents in France, and is mandatory if the net worth of your property/properties is above €1.3 million. There is a 30% reduction for the value of the household’s main home.
The IFI is a progressive tax with an allowance for the first €800,000, applied as follows:
€0 - €800,000: 0%
€800,000 - €1,300,000: 0.5%
€1,300,000 - €2,570,000: 0.7%
€2,570,000 - €5,000,000: 1%
€5,000,000 - €10,000,000: 1.25%
Above €10,000,000: 1.5%
The thresholds apply to all property and real estate rights held directly and indirectly by members of a household on January 1, 2024.
Apart from land and buildings, IFI can also apply to shares related to investment in real estate, or, if of a mixed nature, in proportion to the investment in real estate.
Shares in companies whose main activity is holding real estate are also concerned.
As for shares in other companies owning property (where this is not their main purpose), the situation is more complex though they are often exempt if the building is directly used by the firm for its business or if you own less than 10% of shares.
Buildings you use for your own work are not included. Furnished properties rented out ‘professionally’ are also exempt.
If you think the assets minus property-related liabilities of your household exceeded the threshold, it is your responsibility to make a declaration.
Relevant liabilities include mortgage debt, property taxes and other outstanding debts related to taxable properties.
The IFI is entered in step 3 of the online declaration by checking the box ‘Impôt sur la fortune immobilière’ or on paper form 2042-IFI.
Newcomers to France have special treatment and are not imposed for wealth tax for the first five years after they move. There are also ways that households that just fall into the bracket of payment can reduce their bills. We cover both of these points in our French Income Tax helpguide, available in digital format here.
How to assess the value of your property for tax purposes
The French tax website has a tool to compare sales values in your areaimpots.gouv.fr
The French tax website recommends using its own tool to estimate the value of your property. Known as Patrim, the online tool features a map of property sales in France, allowing you to compare the sales values of properties in your area.
You then enter your address and the size of your property, and the tool will display recent sales in your area.
The tool does not work in all departments (Meurthe-et-Moselle and Mayotte) and in many cases might not have sufficient data due to a lack of recent sales.
Professional surveyors
People who are marginally eligible for the IFI, or between thresholds could benefit from a more precise evaluation.
“Paying €800 to €1,000 for a professional evaluation saves a lot of money for many people,” Samuel Thompson from property surveyors Berthier & Associés told The Connexion.
“Often home owners’ first reflex is to ask an estate agent for an evaluation, but there is a conflict of interest: property owners want a lower value while estate agents want to give the highest value in order to boost the market.
“There is also the danger of providing the tax authorities with an incorrect value, which can lead to your declaration being challenged by the authorities.
“It is ultimately much safer to use a professional surveyor who can be held liable in case of an incorrect value.”
The French authorities accept justifiable evaluations according to the RICS red book international valuation standards.
A professional evaluation usually takes around four weeks and requires surveyors visiting the property. Since the values used for the IFI are based on the sales values over the past three years, the evaluation reached by surveyors can be used again, or adjusted according to changes in the market.
“The key is having an evaluation that you can justify to the tax authorities, that is not just plucked out of the air,” said Mr Thompson.
