French Property Wealth Tax Guide for Overseas Buyers (IFI 2026 Explained)

If you own or are planning to buy property in France and you are an overseas buyer, then understanding the Impôt sur la Fortune Immobilière (IFI),  the French real-estate wealth tax,  is essential. Many foreign investors assume French property taxes end with capital gains or income tax, but the IFI tax opens a separate set of rules triggered when your French property equity exceeds a certain threshold. This guide explains what IFI covers, how it applies to non-residents, how your property value and debts affect it, and why correct planning now can save significant tax later.

What Is the French Property Wealth Tax (IFI) and Why Does It Matter?

The IFI, introduced on 1 January 2018 to replace the former wealth tax (ISF), focuses exclusively on property-wealth instead of all assets. France taxes real estate in this way to recognise the high value of land and homes in certain regions while exempting financial and other assets. The tax matters because it applies annually if the net value of taxable real-estate assets exceeds the threshold (currently €1.3 million for most cases) as at 1 January of the tax year. Failure to declare can lead to penalties, interest charges, and difficulty in future property transactions.

Who Must Pay French Wealth Tax? Residents vs Non-Residents

Full tax liability for French residents (worldwide real estate)

Individuals who are tax-resident in France must declare and pay IFI on their worldwide real‐estate assets ,  both in France and abroad. This means a French tax resident owning property outside France is still liable for IFI.

Limited tax liability for non-residents (French property only)

If you are a non-resident for French tax purposes, you are liable for IFI only on real-estate assets located in France and on the relevant share of property rights or companies owning French property. The threshold and deductions still apply, but the base is narrower.

Mixed-residency cases: second-home owners, holiday buyers, cross-border buyers

If you split time between France and another country, or have second homes, your tax residence status must be assessed carefully under French law (e.g., centre of economic interest, habitual abode). Misjudging residency can lead to unexpected IFI liability.

Comparison: Resident vs Non-Resident IFI Obligations

Which Property Types Are Taxable Under IFI?

Residential real estate (villas, apartments, holiday homes)

Any built property, houses, apartments, land to build, or second homes located in France, is included in the taxable base.  The value is assessed on 1 January of the tax year.

Rental properties, investment portfolios, and company-owned assets

Real estate used for investments (holiday rentals, buy-to-let) is taxable unless specific exemptions apply. Shares in companies owning property (SCI, etc.) may also bring property value into the IFI base.

Property held through SCI, holding companies, or trusts

Assets held via structures such as SCIs (Société Civile Immobilière) do not automatically exempt the property from IFI: value may be attributed to the beneficial owner if the structure holds French property.

What is excluded? Business-use assets, commercial property, certain family structures

Properties used for professional activity may be exempt if they meet strict criteria. Some rural land or forestry assets can also benefit from partial exclusions.

Taxable vs Non-Taxable Assets:

Taxable:

• French villas, apartments, and land for building
  
• Shares in companies holding French property
  
• Rental portfolios based in France
  

Non-Taxable or Partially Exempt:

• Commercial property solely used for a professional business
  
• Real estate held in certain family companies with a qualifying professional activity
  
• Forestry land managed under approved plans

What Deductions, Exemptions & Allowances Reduce IFI Liability?

Primary residence 30% reduction rule

Your main residence in France benefits from a 30% allowance of its market value, provided you own it directly (not via SCI). This means only 70% of that property’s value is included in the taxable base.

Debt eligibility (loans, mortgages, property improvement costs)

Outstanding loans linked to taxable real estate (purchase loan, renovation work, improvement) may be deducted from the property’s value when calculating the net taxable base.

Exemptions for professional real-estate assets

Property used for genuine professional activity by the owner (business premises, rental with hotel status) can be entirely exempt from IFI.

Limits on high-value borrowing & anti-abuse rules for large loans

Ultra-high-value estates facing borrowing or holding structures must respect rules limiting how much debt may be used to reduce the taxable base, especially above €5 million valuations.

Deductible vs Non-Deductible Debt

How to Calculate IFI: Rates, Brackets & Worked Examples

Calculating French wealth tax (IFI) always starts from the same questions: what is the net value of your taxable real-estate assets on 1 January, and does it exceed the €1.3 million threshold after deducting eligible debts? The tax is progressive, which means each “slice” of value is taxed at a different rate. Current 2025 scales are widely expected to continue for 2026 unless the new “unproductive wealth” reform fully replaces them, so investors should always double-check the latest law before filing. The examples below are educational only and cannot replace personalised advice from a French tax professional.

Tax threshold: assets exceeding €1.3M net

IFI only applies if your net taxable real-estate wealth (after allowable debts) exceeds €1.3 million as at 1 January of the tax year. Net wealth means the market value of all taxable properties and rights minus qualifying loans and certain costs linked directly to those properties. If, after deducting eligible mortgages and renovation loans, your taxable base falls below €1.3 million, no IFI is due, and you do not need to pay, although in some cases a declaration may still be required depending on your income-tax position. The threshold applies to the tax household, not each person individually, so joint owners are assessed together.

Full IFI tax bracket table (2026 – based on current 2025 scale)

The current progressive IFI scale taxes your net property wealth in bands. Multiple reputable sources (French tax guides and professional firms) show the same bands and rates:

Remember: IFI is only charged if net assets exceed €1.3 million, but the progressive scale then applies from €800,000 once you cross that point. Any future reform creating a single “unproductive wealth” rate would modify this, so always check the current official information at declaration time.

Example calculation for a non-resident owning a €3M villa

Imagine a non-resident who owns a single French villa worth €3,000,000 on 1 January with no outstanding mortgage and no other taxable French property. Their net taxable base is €3,000,000. Using the progressive bands:

1. First €800,000 → 0% = €0
   
2. Next €500,000 (800k–1.3M) → 0.5% = €2,500
   
3. Next €1,270,000 (1.3M–2.57M) → 0.7% ≈ €8,889
   
4. Remaining €430,000 (2.57M–3.0M) → 1.0% = €4,300
   

Total IFI ≈ €15,689, subject to any small adjustments or credits. This example shows how IFI grows with each band; the key driver is net value after any allowable debt, not the gross property price.

Example calculation for €10M luxury estate with financing

Now consider a high-value estate with a market value of €10,000,000 and an eligible mortgage of €4,000,000 linked directly to its purchase. Net taxable base is €6,000,000 (10M – 4M), assuming all debt is deductible under current rules. Applying the scale:

1. 0 → €800,000 at 0% = €0
   
2. €800,001 → €1,300,000 (€500,000) at 0.5% = €2,500
   
3. €1,300,001 → €2,570,000 (€1,270,000) at 0.7% ≈ €8,889
   
4. €2,570,001 → €5,000,000 (€2,430,000) at 1% = €24,300
   
5. €5,000,001 → €6,000,000 (€1,000,000) at 1.25% = €12,500
   

Total IFI ≈ €48,189. This shows how financing can significantly reduce the taxable base, especially on larger assets, but large loans are subject to specific anti-abuse limits for very high-value holdings.

Special Rules for High-Value Properties (€5M+) and UHNW Buyers

High-value holdings are closely watched by French tax authorities, especially when structures or debt are used to reduce IFI. Households with net taxable real estate over €5 million must pay attention to specific limitations on deductible borrowing and to transparency rules around company ownership. Many UHNW buyers use holding companies, SCIs, or cross-border structures; while these can be legitimate, anti-avoidance measures mean that the property’s real economic value can still be taxed at the level of the beneficial owner. Careful planning with French and international tax advisers is essential.

Anti-avoidance rules for excessive debt

For very high-value portfolios, the law restricts the deduction of “excessive” debt, especially where borrowing appears artificial or mainly designed to cut IFI. For example, some rules cap the portion of debt that can be deducted when net real-estate wealth exceeds €5 million and debt exceeds a set percentage of value, or when loans are interest-free or intra-group. Certain arrangements can be re-qualified if they look like pure tax planning rather than genuine financing, which may result in recalculated IFI and penalties.

Controlled use of corporate structures (SCI, SAS, offshore holding)

SCIs and other French companies remain common structures for holding villas and apartments, especially in joint-family or cross-border situations. However, shares in a company that mostly holds real estate are themselves included in the IFI base at their property proportion. Offshore companies or trusts can be “looked through” under French law, meaning that IFI can still apply to the underlying French assets. Structures should be set up for succession, governance, and asset-protection reasons first, with tax treatment checked by qualified professionals.

Multi-property ownership across France

If you own several French properties, perhaps a main villa on the Riviera plus rental apartments in Paris, their net taxable values are aggregated to determine whether you cross the IFI threshold and which bands apply. Spreading holdings across regions does not reduce IFI; what matters is your total net French real estate at 1 January. For UHNW households, it is common to use a mix of financing, professional-use assets, and rental strategies to manage the IFI base rather than relying on geographical diversification alone.

Declaring & Paying IFI as a Foreign Property Owner

Overseas owners subject to IFI must file the tax as part of the annual French tax cycle. In most cases, IFI is declared on the same return as income tax, with deadlines typically falling in May or June, depending on online or paper filing and residence status. Non-residents usually file via the non-resident tax centre and may need to appoint a representative in complex cases. Payment is generally due shortly after the assessment is issued. Late filing or omissions can trigger penalties and interest, especially if assets have been under-reported for several years.

Filing deadlines for residents and non-residents

French residents file IFI with their annual income-tax declaration, usually by staggered online deadlines depending on their département number. Non-residents also submit through the online system or by paper to the non-resident office, using the same general calendar. Exact dates shift slightly each year, so they must be checked on impots.gouv.fr. Missing deadlines can lead to surcharges or estimated assessments, which are harder to dispute.

Documents required for accurate valuation

To complete an IFI return, you must be able to justify the values used for each property. Typical documentation includes recent property valuations, purchase contracts, notary deeds, loan statements, rental contracts, and any professional valuation reports. For complex holdings or company structures, balance sheets and breakdowns of property shares may also be needed. Storing these documents year by year helps if the tax authority later requests supporting evidence.

Reporting assets held through companies, nominees, or trusts

Where assets are held through an SCI, foreign company, nominee, or trust, you must declare the proportion of the structure’s value linked to French property. French rules include specific obligations for trustees and settlors to report trust-held French real estate or rights. Failure to report can lead to significant fixed penalties in addition to IFI itself. Understanding who is treated as the taxable “owner” in each structure is a key point where expert advice is crucial.

Working with accountants, valuers & bilingual legal advisors

Because IFI touches valuation, loans, cross-border residence, and structures, most non-resident clients benefit from working with a French tax adviser or notaire familiar with international situations. Guides from firms such as FrenchEntrée, Sassi Avocats, and other specialist tax practices give a good overview, but they also stress that detailed modelling must be handled case-by-case. Using bilingual specialists helps align IFI planning with inheritance, income tax, and long-term property strategy instead of treating it in isolation.

How French Wealth Tax Impacts Property Investment Strategy

IFI influences how overseas buyers structure and hold French property, especially at luxury levels. Investors who plan properly view IFI as one factor in a wider financial picture rather than a reason to avoid France completely. Wealth tax can affect choices such as how much to borrow, whether to buy one very large villa or several smaller units, and how much of the portfolio is used professionally or rented out. For UHNW clients, IFI is often balanced against France’s lifestyle, stability and long-term capital preservation benefits.

Buying with financing to reduce taxable base

As the examples show, using a reasonable level of mortgage can significantly reduce the net IFI base by deducting qualifying loan balances. That said, the debt must be real, linked directly to the property, and compliant with anti-abuse rules, particularly for very high-value holdings. The goal is to find a balanced loan size that supports flexibility, not to over-leverage purely for tax reasons.

Choosing location + rental structure to offset costs

Some investors accept IFI as part of owning in top locations such as the French Riviera, then offset the cost with rental income during selected periods. Combining strong seasonal rental demand with efficient financing and accurate expense tracking can help absorb part of the wealth-tax burden while preserving long-term capital growth.

Long-term holding vs resale strategy for tax efficiency

High transaction costs and capital-gains considerations mean frequent buying and selling rarely make sense purely to manage IFI. Many overseas owners instead adopt a long-term holding strategy, using well-chosen assets in prime areas that justify their costs over time. Wealth tax becomes one recurring cost within a broader, stable ownership plan rather than the main driver of decisions.

How France Compares to Other Wealth Tax Destinations (2026)

For many investors, the key question is not “does France have a wealth tax?” but “how does it compare with other countries I invest in?” France’s IFI targets real estate only, whereas Spain and Switzerland operate broader wealth-tax systems, and Portugal currently relies more on property-specific levies rather than a general wealth tax. This means that for property-focused UHNW investors, France may be more predictable than some imagine, especially when holdings in financial assets remain outside the IFI scope.