Filing Your Wealth Tax Return
Since January 1st, 2018, the Wealth Tax, known as ISF, has been replaced by the Real Estate Wealth Tax, aptly named IFI. It applies to individuals holding a net real estate wealth exceeding 1,300,000 euros. This is one of the major reforms of Emmanuel Macron’s government, which has significant implications for your assets.
Note that with the specific ISF gone, taxpayers must now include the gross value and the taxable net value of their wealth in the annex to their Income Tax Return. It is worth mentioning that even estates over 2.57 million euros no longer have a specific declaration to file.
What is the IFI?
The IFI is related to the taxable net real estate wealth of the tax household members. Whether composed of single individuals, widows, divorcees, married couples, civil partners, or cohabiting partners, as well as their minor children. In this sense, the IFI is different from income tax.
If the tax household accounts for a taxable net real estate wealth exceeding 1,300,000 euros on January 1st, then its members are liable for the real estate wealth tax. Being a declarative tax, liable individuals must submit an IFI declaration in their own name via the annex 2042-IFI. Although the IFI trigger threshold is 1.3 million euros, the tax rate applies from the bracket between 800,000 and 1.3 million euros of net wealth, in the same way as for the ISF.
The value considered for the IFI calculation is the taxable net value, that is, the value of the real estate minus the debts related to it.
In simplified terms, to determine the value of your taxable net wealth, you just need to apply a subtraction:
Taxable net wealth = gross value of the wealth – allowance on the main residence + deductible debts.
Tips for Filing IFI
When should one file their IFI declaration? The submission date of the IFI declaration must therefore be identical to the submission date of the Income Tax Return to be completed in spring 2024.
* Threshold and conditions for IFI liability. If you are subject to IFI, you must file an annex to your income declaration by filling out form n°2042-IFI, except for non-residents and adults attached to their parents’ tax household.
* Procedure for declaring IFI. The declaration of assets can be done online from your personal space on the website www.impots.gouv.fr.
Form 2042-IFI outlines taxable assets solely to real estate, including:
- primary residence
- rental investment
- shares or company stakes holding real estate assets…
Thus, the IFI declaration unfolds throughout an 11-page document in which the taxpayer subject to IFI details all their directly or indirectly held real estate assets and rights.
Important: an estimated value must be indicated for each of these assets.