French Wealth Tax Return 2020
Thursday 14 May 2020
Since 2018, persons holding net taxable real estate assets in excess of €1.3 million are liable to a real estate wealth tax (IFI), writes Deborah Zerbib.
The real estate wealth tax in France is called Impôt sur la Fortune Immobilière (IFI).
If you are a French tax resident, your taxable assets include :
- Your property and real estate rights located in France and abroad, held directly or indirectly, i.e. through any legal structure, company or other.
If you are a non-resident, and a tax treaty with France is in place, your taxable assets include :
- Property and real estate rights located in France;
- The shares you own in real estate companies holding real estate in France;
- The shares you own in real estate companies holding real estate in France and abroad, up to the amount of the property and rights owned in France.
Under certain conditions, if you have just transferred your tax domicile to France, after having been domiciled abroad for the previous five calendar years, you are only taxed on property and real estate rights owned in France. This system lasts until 31/12/N+5. Beyond that date, you are taxable under the conditions of ordinary law, i.e. on your worldwide property assets.
For the current tax return, IFI is calculated on your net taxable assets as at 1 January 2020.
The net taxable assets are the sum of the taxable values of your real estate assets, from which the deductible debts will be subtracted.
The taxable assets are in particular :
- Houses, apartments and their outbuildings (garages, parking, cellars) for personal use or for rent;
- Buildings classified as historical monuments;
- Buildings under construction as of January 1, 2020;
- Buildings or fractions of buildings held indirectly via shares in companies;
- Property and real estate rights that do not meet the conditions to be considered as professional property/
Certain property is exempt, such as professional property, woods and forests, rural property leased on a long-term basis, etc
The value of your principal residence will benefit from a lump-sum allowance of 30%, provided it is not held through a management SCI.
The debts that can be deducted must meet three criteria:
- Exist as of 1st January, 2020;
- Be personally dependent on a member of the tax household;
- Be related to taxable assets.
Deductible debts can be, for example, expenses relating to the acquisition of a property, its improvement, reconstruction, extension, maintenance of the property or taxes relating to the property (e.g. property tax).
Certain debts are excluded from deduction, even if they meet the three conditions.
Your IFI declaration must be made at the same time as your income tax return.
Since 1 January 2019, the law requires the use of the electronic declaration for both the income tax return and the wealth tax return.
The deadlines for online filing are:
- 4th June, 2020 - Departments 01 to 19 and for non-residents ;
- 8th June, 2020 - Departments 20 to 54;
- 11th June, 2020 - Departments 55 to 974/076.
For those declaring their income for the first time, it is necessary to file a paper declaration. The deadline is 12 June 2020, regardless of place of residence, the postmark being proof of the date.
If you do not have income taxable for income tax purposes, you will still need to complete a wealth tax return if you are liable.
The amount of wealth tax to be paid will appear on your tax notice. The payment must reach the tax authorities before September 15, 2020 for payments by cheque, and by 22nd September, 2020 by direct debit or on-line.
Deborah Zerbib,Tax Lawyer
Roche & Cie, Chartered Accountants