If you own property in France, or are planning to, understanding how wealth tax in France works is essential, especially as a foreigner or second-home owner. Known officially as Impôt sur la Fortune Immobilière (IFI), this tax targets real estate wealth and can apply whether you live in France full time or only visit a few times a year.
France has long had a form of wealth tax, originally aimed at redistributing wealth and funding public services. However, in 2018, significant reforms were introduced: the old ISF (Impôt de Solidarité sur la Fortune) was replaced with the more targeted IFI, which now focuses solely on property-based wealth rather than overall net worth including financial assets.
In this article, we’ll help you understand who pays wealth tax in France, what counts as taxable, and how to manage or reduce your liability.
Table of contents
What is the French wealth tax (IFI)?
The Impôt sur la Fortune Immobilière (IFI) is France’s current wealth tax, applied exclusively to high-value real estate assets. Introduced in 2018, the IFI replaced the broader ISF (Impôt de Solidarité sur la Fortune), which previously taxed all forms of wealth, including investments, jewellery, and savings. The reform was designed to encourage investment in financial markets while continuing to tax substantial property holdings.
Key features of the IFI
- Applies only to real estate assets, including homes, rental properties, and property-owning companies.
- Threshold for liability is set at 1.3 € million in net real estate wealth.
- Applies to both residents and non-residents, but only on property located in France for the latter.
- It is assessed annually, based on the market value of the property as of 1 January each year.
Unlike income tax, which reflects earnings, the IFI is based on the total value of your real estate holdings, minus eligible debts. It is particularly relevant for those who own second homes, large properties, or multiple investment properties in France.
Who has to pay the wealth tax in France?
The wealth tax in France (IFI) applies to individuals whose net real estate assets exceed 1.3 € million. However, whether you’re taxed on all your global property or only on your assets in France depends on your residency status.
Residents vs non-residents
- French residents are taxed on worldwide real estate holdings, including property owned abroad.
- Non-residents are taxed only on real estate located within France, such as a holiday home or rental investment.
This distinction is particularly important for foreigners, expats, and retirees who may retain property in their home country while living in France.
Thresholds and calculation
Although the IFI liability threshold begins at 1.3 € million, taxation only applies once your net property value exceeds 800,000 €. The tax is progressive and calculated on a sliding scale.
Marital and family situations
Wealth is assessed per household, meaning:
- Married or civil partners file jointly.
- Assets owned by children under 18 are included in the parents’ taxable base.
- Joint ownership (e.g. with siblings or co-investors) is divided according to legal ownership shares.
Checklist: you may be liable if…
- You own one or more properties in France with a combined market value over 1.3 € million.
- You are resident in France and own high-value property abroad.
- You hold shares in a company (e.g. SCI) that owns French real estate.
- You’ve inherited or gifted property that adds to your estate’s total value.
Understanding whether you’re liable is the first step to managing or reducing your IFI exposure.
> You might be interested in this article: Buying with a SCI in France
What assets are included in the IFI?
The Impôt sur la Fortune Immobilière (IFI) specifically targets real estate wealth. Unlike its predecessor (ISF), which included financial assets, investments, and luxury goods, the IFI focuses solely on property-related holdings, whether directly owned or held indirectly through companies or trusts.
Included assets
The following are counted toward your taxable estate under the IFI:
- Main residence in France (with a 30% allowance on its value)
- Second homes or holiday properties
- Rental properties (even if they generate income)
- Land, building plots, and undeveloped property
- Shares in property-owning companies (e.g. SCIs or sociétés civiles immobilières)
- Property held through trusts or real estate holding structures
💡 Note: If you own a home in France through a company, its value may still be included in your IFI base depending on your shareholding and use of the property.
Excluded assets
Not all wealth is subject to IFI. The following are not taxable:
- Bank accounts, shares, stocks, and bonds
- Pensions and retirement savings
- Life insurance contracts
- Art, antiques, jewellery
- Vehicles, boats, and personal belongings
- Property used for professional/commercial purposes (under specific conditions)
| Asset Type | IFI Taxable? |
|---|---|
| Primary residence | ✅ (70% of value taxed) |
| French holiday home | ✅ |
| Rental investment property | ✅ |
| Shares in an SCI holding real estate | ✅ |
| UK or overseas share | ❌ |
| French savings account | ❌ |
| Art collection | ❌ |
| Commercial-use property | ❌ |
How is the tax calculated?
The wealth tax in France (IFI) is calculated using a progressive scale applied to the net value of your taxable real estate assets. This means deductions are taken into account, most notably mortgage debt, co-ownership shares, and the 30% allowance for your main residence (if applicable).
Step-by-step: Calculating your IFI
- Determine the total market value of all your real estate assets as of 1 January.
- Subtract allowable debts, such as outstanding mortgage balances or loans directly linked to the property.
- Apply the 30% reduction on the value of your main home (if it’s your primary residence in France).
- Use the progressive tax brackets to calculate your liability (see table below).
IFI tax rates (2025)
| Net Taxable Property Value (€) | Applicable Rate (%) |
|---|---|
| Up to 800,000 | 0% |
| 800,001 – 1,300,000 | 0.5% |
| 1,300,001 – 2,570,000 | 0.7% |
| 2,570,001 – 5,000,000 | 1% |
| 5,000,001 – 10,000,000 | 1.25% |
| Over 10,000,000 | 1.5% |
💡 You’re only liable for tax on the amount above 800,000 €, even though the threshold for liability begins at 1.3 € million.
Example: IFI calculation scenario
Let’s say you own the following:
- A holiday home in France worth 1.5 € million
- No outstanding mortgage
- You are a non-resident and own no other French property
Net taxable value = 1.5 € million
Taxable amount above 800,000 € = 700,000 €
Your IFI would be calculated using the 0.5% and 0.7% brackets and would total around 4,900 €.
Working with a tax adviser is strongly recommended, especially if you have multiple properties or own through corporate structures.
How to declare and pay the IFI?
Paying the wealth tax in France (IFI) is not automatic, you must actively declare your real estate assets as part of your annual French income tax return, even if you have no income taxable in France.
Who needs to declare
- French residents: Must declare all real estate worldwide if the net value exceeds 1.3 € million.
- Non-residents: Must declare French property only, if it exceeds the same threshold.
If you do not usually file a French income tax return (common for non-residents), you’ll need to file a dedicated IFI declaration.
How to file
- IFI is declared using form 2042-IFI, submitted alongside your annual income tax return (form 2042).
- If you file online, the IFI section is integrated into the tax portal.
- Paper submissions are possible but must follow the official deadlines (typically mid-May to early June).
Required documentation
- A full inventory of real estate assets, including estimated market value as of 1 January.
- Details of debts deductible against IFI (e.g. mortgages, loans).
- Supporting documentation for ownership shares, such as SCI statements or inheritance records.
- In some cases, professional property valuations may be requested (especially for high-value assets).
Paying the IFI
- Once declared, the French tax office will issue a tax notice (avis d’imposition) outlining your IFI liability.
- Payment is usually due between August and September, either via direct debit, online payment, or bank transfer.
Penalties for non-compliance
- Late declarations incur interest charges (0.20% per month) and fixed penalties (up to 10% or more).
- Failure to declare may also trigger a tax audit, especially if property transfers or undeclared assets come to light through notaires or financial institutions.
💡 Tip: Using a bilingual accountant or tax adviser familiar with international property law can simplify the process and help ensure full compliance.
Can foreigners avoid the wealth tax?
The wealth tax in France (IFI) applies to foreigners in specific cases, but there are ways to legally reduce or avoid liability, particularly for non-residents or new arrivals. Whether or not you’re taxed depends largely on your residency status, the nature of your property, and how it’s held.
Non-residents: Limited exposure
If you’re not a French tax resident, you are only taxed on real estate located in France. This means:
- Property in the UK, US, or elsewhere is not considered for IFI.
- French real estate worth under 1.3 € million is not taxable.
- Shares in property-holding companies (like an SCI) may be included if they relate to French property.
Residents: Worldwide real estate is taxable
If you become a French tax resident, all real estate holdings worldwide count toward your IFI threshold, unless exempted under specific rules (e.g. for diplomatic staff or temporary assignments).
💡 Good to know: New residents may benefit from a temporary exemption on foreign property for the first five years of French tax residency (subject to conditions).
Holding property through a company
Many owners consider using a company structure (e.g. SCI or SARL) to hold French property. This can:
- Offer succession and management advantages
- Not exempt you from IFI if the company’s primary purpose is property ownership
Tax treaties and double taxation
France has double tax treaties with several countries (including the UK and US), but these do not usually override IFI obligations. They may, however, prevent double counting of real estate wealth in two jurisdictions.
🔗 Considering selling your French home to simplify your estate? Read our guide to selling your French property.
Reducing your IFI liability
If your French or global real estate wealth exceeds the IFI threshold, there are several legitimate ways to reduce your exposure to France’s wealth tax. These strategies are especially relevant for foreign homeowners, retirees, and investors who want to preserve assets while remaining compliant.
1. Deductible Debts
You can reduce your taxable base by subtracting certain debts, provided they are directly linked to the real estate. These may include:
- Outstanding mortgages or property loans
- Property acquisition costs (e.g. notaire fees or agency commissions)
- Major renovation or repair loans (not routine maintenance)
- Shared ownership debts (proportioned to your share)
2. Main Residence Allowance
If you are a French tax resident, you benefit from a 30% reduction on the value of your main home (résidence principale), provided it’s not held through a company.
This is one of the most valuable IFI allowances available.
3. Gift and Estate Planning
Strategic gifting or restructuring property ownership can reduce IFI exposure over time:
- Gifting property to children or heirs (with applicable tax thresholds)
- Transferring partial ownership via usufruct arrangements
- Holding property jointly, which can split taxable value
⚠️ Always seek advice from a bilingual tax lawyer or notaire before making structural changes, as unintended consequences (like capital gains exposure) can arise.
4. Reassess Property Valuations
IFI is based on market value as of 1 January, so it pays to:
- Use realistic, justifiable valuations
- Engage a professional property valuer, especially if your estate is near the threshold
- Review whether recent market conditions have lowered your asset value
5. Holding Property Through Mixed-Asset Companies
If you hold shares in a company that owns real estate and other assets, only the property portion is taxable. This is often used by entrepreneurs or business owners with diversified portfolios.
FAQs - French wealth tax (IFI)
Do I pay wealth tax if I only own a holiday home in France?
Only if the net value of your French real estate exceeds 1.3 € million. For non-residents, only property located in France is assessed.
Is there a tax on overseas property?
Yes, if you are a French tax resident, your worldwide real estate holdings count toward the IFI threshold. Non-residents are only taxed on property in France.
What if the property is jointly owned with family?
The tax is calculated based on your proportional share of the property’s value. For couples, property is assessed jointly. For unrelated co-owners, each person is taxed on their share.
Can I reduce my taxable value with mortgage debt?
Yes. Outstanding loans used to purchase or improve the property can be deducted, provided they are still active as of 1 January in the tax year.
Are pensions or savings accounts included in the French Wealth Tax IFI ?
No. The IFI only applies to real estate. Pensions, stocks, ISAs, savings, and bank accounts are excluded from the calculation.
Final notes: Is the wealth tax something to worry about?
The wealth tax in France (IFI) can seem daunting, particularly to foreign property owners or retirees planning a long-term move. However, it only applies to those whose real estate assets exceed 1.3 € million, and several allowances and deductions help reduce your liability.
For most homeowners, especially those with a single holiday home or modest rental property, IFI will not apply. But if you do fall within the taxable threshold, taking time to understand the system, and planning ahead with a tax adviser, can save you money and stress.
Whether you’re thinking of buying, already own property in France, or are planning your estate for the next generation, being informed about your obligations under IFI is key to managing your assets
