Real-estate wealth tax (IFI)
An annual tax payable by individuals whose net taxable real-estate assets exceed €1.3 million on 1 January. Deductible liabilities include loans taken out to acquire or renovate taxable properties. For wealth-management clients, structuring the financing (loan amount and duration) can reduce the IFI base, which the broker factors into their advisory.
Key points
- The entry threshold is set at €1.3 million in net taxable real-estate assets on 1 January.
- Deductible debts are those taken out to acquire or improve taxable properties.
- The primary residence benefits from a 30% deduction on its market value.
- A bullet loan keeps the deductible liability high for longer than an amortising loan, which can be optimised.
Frequently asked questions
How does a mortgage reduce the IFI taxable base?
The outstanding capital of a loan taken out to acquire or renovate a taxable property is directly subtracted from that property's value when calculating the net estate. So a property valued at €1 million with €400,000 outstanding capital contributes only €600,000 to the IFI base. This is why loan duration and amortisation type directly affect the annual IFI charge.
Are SCPI units subject to IFI?
Yes, in proportion to the fraction representing the real-estate assets held by the SCPI. This fraction is communicated annually by the management company. Likewise, certain life-insurance contracts invested in property-linked units (SCPI, OPCI) are partially subject to IFI. The broker and wealth manager coordinate the declaration to avoid omissions.
Why can IFI influence the choice between an amortising loan and a bullet loan?
With an amortising loan, the outstanding capital decreases each month, progressively reducing the deductible liability and mechanically increasing the IFI base. A bullet loan keeps the capital constant until maturity, maintaining a high deductible liability throughout. For a high-wealth IFI taxpayer, the annual IFI differential may justify the additional cost of a bullet loan.
In practice
A taxpayer holds gross real-estate assets of €2 million with €600,000 outstanding debt. Their net IFI estate is therefore €1.4 million. After the 30% allowance on a primary residence valued at €800,000, the base shrinks further, illustrating the benefit of maintaining financing.
Official sources
- Assets taxable under the IFI · impots.gouv.fr
- Housing and financing information · ANIL
- Mortgage credit (official guide) · Service-Public.gouv.fr