From 1 January 2018, the Impôt de solidarité sur la fortune (ISF) was replaced by Impôt sur la fortune immobilière (IFI).

22 May deadline

The French Revenue have recently issued CERFA forms n° 2042 IFI and the deadline for declaring your IFI is 22 May (as non-residents). The declaration is made on a self-assessed basis.

The taxable base comprises the fair market value of the immovable assets as owned by the foyer fiscal (taxpaying household), i.e. spouses/civil partners or even cohabiting couples and their dependent children. Movable assets (contents, vehicles, chattels) are no longer taxable.

Non-residents are only taxed on their French-situated properties (French residents are taxed on their properties worldwide). These include settled property regarded as forming part of the settlor’s wealth even if held through a trust.

The threshold (€1.3 million) and rates of tax (from 0.5% to 1.5%) remain unchanged.

Debts outstanding on 1 January 2018 may be deducted with supporting evidence.

However, the deduction of your mortgage is now only available where the loan was taken out to fund (new art 974 CGI):

  • the acquisition of the property, or
  • additional building works (refurbishment, maintenance and repairs)

Furthermore, the rule is now that an interest only loan is only deductible each year (D) for the capital outstanding (T) less the same (T) multiplied by the number of years since the funds were made available loan (n) divided by the total number of years (N).

D = T - (T x n)

    N

Example for a loan of €2 million over 20 years with 5 years of interest paid:

D = €2,000,000 - (€2,000,000 x 5)

                                     20

D = 1,500,000 (instead of previously €2,000,000)

Where the gross wealth is in excess of €5 million, only 60% (€3 million) is fully deductible. Loans in excess of this amount are only deductible up to 50%.

You may, as in the past, deduct your taxe foncière / taxe d’habitation and your ‘theoretical’ IFI itself (these are debts as at 1 January).

Relief is given for investment into small to medium EU businesses (as defined), corresponding to:

  • 50% of the amount subscribed (directly or through holding companies) in the capital of certain small to medium EU based companies (as defined) with a maximum of €45,000
  • 50% of the amount subscribed in the capital of qualifying French hedge funds (or other EU countries equivalent): fonds d’investissement de proximité (FIP), fonds communs de placement dans l’innovation (FCPI) or fonds communs de placement à risques (FCPR) with a maximum of €18,000

To be taken into account, the investment must have been made between 17 May 2017 and 31 December 2017 (as non-residents). Relief is subject to the retention of the subscribed shares over a period of five years.

IFI 2018 will be calculated as follows (‘clawing back’ to €800,000 once the €1.3 million threshold has been reached):

Net wealth (€)

Rate

Up to 800,000

0.00%

From 800,001 to 1,300,000

0.50%

From 1,300,001 to 2,570,000

0.70%

From 2,570,001 to 5,000,000

1.00%

From 5,000,001 to 10,000,000

1.25%

Above 10,000,000

1.50%

IFI cannot exceed 75% of the household’s income. However this ‘cap’ is only available to French residents.

Your declaration should be sent to Centre des Impôts des non-résidents, 10 rue du Centre, 93463 Noisy le Grand Cedex, France.