Deductions and exemptions from French Property Wealth Tax
What are the deductions and exemptions from French Property Wealth Tax you should know?
There are some important deductions and exemptions from French Property Wealth Tax that you will need to know if you are starting a new French residency or returning to France.
Replacing the former French wealth tax, IFI is levied on the net real estate assets of the household (foyer fiscal), which includes properties as well as real estate rights.
If you are a French tax resident, your worldwide real estate assets will be taken into account to assess whether you are liable for IFI and which rate applies. If not, only real estate properties located in France will be looked at.
However, when you first come to France (or return to France), you can benefit from a specific regime where only your properties located in France are taken into account for the calculation of your IFI during your first five years of French residency.
What deductions and exemptions are there from French Property Wealth Tax:
The main deductions and exemptions include
Principal residency discount
The market value of your principal residence property is discounted by 30% to calculate your net real estate assets.
Professional and agricultural exemptions
Some properties can also be excluded from the tax base if they are used for professional or agricultural activities.
If you donate to specific charities, your IFI can be reduced by 75% of the value of your gift (up to €50,000).
A contributions cap
There is also a cap: the portion of tax paid exceeding 75% of your global revenues in a given tax year can be offset from your next year IFI.
The household is liable to IFI when the net real estate assets are worth more than €1.3 million on January 1st each year. If your household is liable, the progressive rates apply as follows:
- Up to €800,000: 0%
- Between €800,001 and €1,300,000: 0.5%
- Between €1,300,001 and €2,570,000: 0.7%
- Between €2,570,001 and €5,000,000: 1%
- Between €5,000,001 and €10,000,000: 1.25%
- Greater than €10,000,001: 1.5%