The Real Estate Wealth Tax (Impôt sur la Fortune Immobilière – IFI) replaced the Wealth Tax (Impôt sur la Fortune – ISF) in 2018. In February 2025, an important update was announced: IFI payments can now be made via direct debit (either on the due date or monthly). This flexibility simplifies tax management, especially for owners of high-value properties in the South of France, such as villas on the Côte d’Azur or holiday homes in Provence.
Who is Affected by the Real Estate Wealth Tax (IFI) in France?
The IFI applies to individuals whose net real estate assets exceed 1.3 million euros. In the South of France, where property prices are often high due to demand for luxury properties, a significant number of owners fall into this category.
Taxable Assets:
- Directly owned real estate, e.g., holiday homes or primary residences in regions like Nice, Cannes, or Saint-Tropez.
- Shares in real estate companies and investment funds (SCPI, OPCI, or SCI) proportional to the property value.
- Assets held indirectly through companies or organizations.
Exemptions and Exclusions:
- Properties used for professional activities, such as commercial properties or offices.
- Certain furnished rental properties under specific conditions, which is particularly relevant for landlords in the South of France, where holiday rentals are common.
IFI Tax Rates for 2025 in France
The IFI is a progressive tax with the following rates:
| Net Taxable Asset Range | Applicable Rate |
|---|---|
| Up to 800,000 EUR | 0% |
| From 800,001 to 1,300,000 EUR | 0.50% |
| From 1,300,001 to 2,570,000 EUR | 0.70% |
| From 2,570,001 to 5,000,000 EUR | 1% |
| From 5,000,001 to 10,000,000 EUR | 1.25% |
| Above 10,000,000 EUR | 1.50% |
Notes:
- For assets between 1.3 and 1.4 million euros, a discount is applied to ease the entry into the IFI.
- A cap limits the combined IFI and income tax to 75% of the tax household’s income.
Tax Declaration and Payment
The IFI is declared through the main income tax return (Form 2042-IFI). The tax must be paid upon receipt of the tax notice. The new direct debit payment option facilitates timely payments, offering significant administrative benefits for property owners in the South of France, many of whom are internationally active.
How to Reduce the Real Estate Wealth Tax in France
Donations to eligible organizations allow a direct reduction of the IFI by 75% of the donated amount, up to a maximum reduction of 50,000 EUR per year (achieved with a donation of 66,667 EUR). These donations must be made to non-profit organizations engaged in charitable activities, which may include local initiatives in the South of France, such as environmental projects or cultural institutions.
Real Estate in the South of France and the IFI
The South of France is renowned for its attractive real estate market, ranging from luxurious villas to charming country homes. Due to high property values in cities like Nice, Antibes, or Aix-en-Provence, many owners exceed the IFI threshold of 1.3 million euros. Strategic planning, such as using properties for professional purposes or making donations, can significantly reduce the tax burden. Additionally, the new direct debit option simplifies tax payment management for international investors active in this region.
Please do not hesitate to contact Bernard Baeumlin, your German-speaking tax advisor in France, for further information on real estate property tax in France. We are at your disposal for any further information.
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