Real estate wealth tax: all you need to know about the IFI
The reform of the wealth tax has led to the creation of a new tax: the Real Estate Wealth Tax. Objective, tax rates and thresholds, allowances, scale, exemption, deductible liabilities: an overview of the IFI's key elements.
A tighter base on real estate
The main objective of the Real Estate Wealth Tax (IFI), formerly ISF, is to reduce the tax base on real estate. Thus, this new wealth tax aims to stimulate the economy through savings so that companies can finance themselves more easily. All OPCIs and SCPIs are subject to this new tax, without exception, including those associated with capitalisation and a life insurance policy.
The IFI only covers real estate assets. This new tax applies to shares in companies, shares and organizations located in France or abroad:
- At the cash surrender value of life insurance policies;
- Up to the representative value of direct or indirect rights or real estate.
As for the ISF, the IFI's tax threshold is set at €1,300,000, after deducting expenses. Net real estate assets whose value is less than this amount are therefore exempt.
There is no major change in the tax relief, since the Real Estate Wealth Tax maintains the 30% tax relief on the main residence. The cap system also remains unchanged. However, a new feature may appear in 2019: withholding tax.
The modernization tax credit (CIMR) will have a double consequence: it will make the IFI cap unnecessary and will avoid double taxation of income.