The French wealth tax (IFI) for non-residents: 1.3 million threshold, taxable base, debts, scale and return

Why does the IFI affect owners domiciled abroad?

The logic of the tax is territorial. A taxpayer domiciled in France is taxed there on their entire real estate wealth, wherever it sits. A taxpayer domiciled outside France is taxed only on their French real estate: your nationality, the length of your stays and the currency of your income do not matter, the connecting factor that counts is your tax domicile. It is also the same criterion that organises your French income-filing obligations.

The trigger of the tax obeys a legal threshold, which no generic article can quantify on your behalf. That threshold is assessed at household level under the rules applying to your situation, first on the gross value of the French real estate assets, then the tax is computed on the net value, after deductible debts are taken into account under the prescribed conditions. Two practical consequences follow: estimate your wealth every year rather than once and for all, and document the value of properties and debts as you go, because that file is what will support the declaration when the time comes.

What goes into the tax base: properties, shares, debts?

Three families of elements make up the base. Directly held properties, first: any real estate located in France, flat, house, land, parking space or commercial premises, whatever its use, occupied by you, let or vacant, enters at its market value assessed under the rules in force. Shares in companies, next: specific mechanisms bring into the base all or part of the rights you hold in companies whose assets consist of real estate, under rules that differ notably according to whether the company is subject to corporate tax. Debts, finally: certain ones are deducted from the base, borrowings taken out for acquisition or expenses incurred for the repair and improvement of the property, under strict conditions of existence, maturity and connection; where company shares are involved, deductions follow separate rules.

The value used deserves a word. It is assessed under the rules in force, from market references, and it is prepared: dated comparables, a value file for each property, or a professional valuation for unusual assets, make the best defence in the event of an audit. For company shares, the value follows the company’s own rules, which do not merge with the value of the properties it holds. These distinctions matter: they are what move the base, long before any debate on the detail of the rules.

The table below summarises the main notions and what they require settling with an adviser.

Which properties can leave the base?

The most structuring exemption concerns business properties: buildings qualified as professional by the texts leave the base when the conditions are met, notably when the property is assigned to the owner’s activity or to that of a company operating it. This qualification follows precise rules of allocation and operation: it is prepared in advance, rarely after the fact.

Other mechanisms play according to the nature of the holdings: allowances provided by the rules on certain categories of property, a specific treatment for split interests, usufruct and bare ownership being distributed between their holders under dedicated rules. Finally, location decides: only French real estate enters the non-resident’s base, which makes the connection of each property, and of each company share, decisive. None of these doors opens without examination: that is the work of a partner tax adviser, who compares your holdings with the actual conditions, year after year.