You probably knew the ISF tax if your property is worth more than €1,3M once you’ve deducted any mortgage you may have on the property plus some additional administration fees.
French President Emmanuel Macron decided to change the rules of ISF as well as its name; welcome IFI (Impôt sur la fortune immobilière or French Tax on Real Estate literally translated) and exit ISF. What’s new besides the name? Well, first now only the real estate properties are considered for this new tax and no longer the expensive supercars, yachts or deposits.
What’s new as well is the way the tax authorities will consider your interest only mortgage; with ISF it was easy to erase the value of a property by getting an interest only mortgage high enough so the netto value of the property would be under the threshold; it is not possible anymore as the tax authorities will imagine a “fake” capital repayment every year following this simple method : Mortgage amount / Number of years of this exact loan = The amount you can deduce every year.
Obviously this new way of calculation is not the most ideal…
However, the rates remain the same :
| Under €800 000 | 0 % |
| > €800 000 and < €1 300 000 | 0,50 |
| > €1 300 000 and < €2 570 000 | 0,70 |
| > €2 570 000 and < €5 000 000 | 1 |
| > €5 000 000 and < €10 000 000 | 1,25 |
| > €10 000 000 | 1,5 |
A lot of parameters are to be considered for this new tax, and we’ll be happy to answer all your questions. It is also important to understand that the tax payer has to declare the IFI himself when he thinks that the value of his assets is above the threshold.
Please contact us for a personal case study.
