IFI tax domicile

IFI tax domicile

Since January 1, 2018, the Real Estate Fortune Tax (IFI) replaces the Solidarity Tax on Fortune (ISF). This new tax system launched by the government of Emmanuel Macron applies to all taxpayers who have real estate assets whose value exceeds € 1,300,000. Do you know the rules of this tax and how it applies? The regime varies according to the tax domicile (France or abroad). Barnes Mont Blanc helps you see more clearly.

Taxable property

The IFI concerns French citizens who reside in France for tax purposes or have real estate in France whose property value is greater than 1.3 million euros. This heritage can consist of luxury real estate or several properties. Also included are shares in SCPI (civil real estate investment companies), SCI (civil real estate companies), shares in listed real estate companies and the repurchase value representative of real estate assets for life insurance contracts.

You are resident in France for tax purposes

If you are resident in France for tax purposes, the calculation of the IFI takes into account all of your property assets. The tax authorities consider that your tax domicile is France if you reside more than half of the year on French territory. In this case, you must pay the IFI if all of your assets exceed the threshold of 1.3 million euros. All your real estate is subject to tax, in France and abroad. You also reside in France for tax purposes if you exercise your main professional activity in France (although you live abroad), if the headquarters of your company or of other economic interests such as investments are located on French soil.

You are resident abroad for tax purposes

If you do not meet one of the criteria mentioned above, you are not resident in France for tax purposes. In this case, only your real estate located on French territory is subject to the IFI. The tax does not apply to other real estate that you hold abroad.

International conventions to avoid double taxation

If you are not resident in France for tax purposes, the fact that your property located abroad is exempt from the IFI does not mean that it is not taxable. They may be subject to a similar tax in the country in which the property is located. That said, to avoid double taxation, there are international conventions. These conventions establish the tax rules for people whose property assets are spread over several countries. To know the tax provisions which concern you, you must take note of the international convention signed between France and the country where you reside (and / or that / those where your real estate are located).

You return to France

A return to France necessarily implies a change of tax if only your real estate located on French territory were subject to the IFI. Your tax grid will take this change into account the year after you return. Some taxpayers who return to France benefit from a temporary exemption if they have resided abroad for at least 5 years. This exemption applies to real estate located abroad.

Want to go further ? Find out about other special features of the IFI such as taxable property and exemptions.

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