The wealth tax on real estate in 7 points

Article updated on 25/09/2026

Created in 1982, the ISF was reshaped several times. The Wealth Tax on Real Estate (IFI), which came into effect on 1 January 2018, is a new version of the Wealth Solidarity Tax (ISF) and now applies only to property assets. Here is a summary in 7 points.

In summary

• The IFI applies to tax households whose net taxable property assets exceed €1.3 million on 1 January, including assets held by minor children.
• Its base is limited to non-professional property: land, homes, shares in property companies, SCPIs and OPCIs.
• The scale is progressive, from 0.5% to 1.5%, and the calculation starts at €800,000 once the €1.3 million threshold is crossed.
• Several levers reduce the bill: a 30% allowance on the main residence, donations to public-interest bodies, professional property, woodland and forests, and tax relief between €1.3 and €1.4 million.

Update of 25 September 2026:

The IFI scale has not changed in 2026: the threshold remains €1.3 million of net property assets, with six brackets and rates from 0.5% to 1.5%. As the scale is not adjusted for inflation, the tax weighs slightly more each year on an unchanged portfolio as property prices rise. During the 2026 budget debates, the idea of turning the IFI into a tax on unproductive wealth, which would have widened the base to other assets, was discussed and then set aside: no reform had come into force by the summer of 2026. Source: Toutsurmesfinances and MeilleureSCPI, 2026.

From ISF to IFI: what you need to know about the rules

1. Who is affected by the IFI?

The IFI is assessed at the level of the tax household, since assets held by minor children under their parents' legal administration are included. People whose tax residence is in France are taxed on all their property assets and rights held in France and abroad, while people resident abroad are taxed only on assets located in France.

• Property assets and rights located in France and owned by members of the household.
• Shares held in property companies owning real estate in France.
• Shares held in property companies owning real estate in France and abroad, limited to the assets located in France.
• Inbound expatriates who have lived abroad for at least five calendar years, for their assets located in France.

You are liable for the IFI from €1.3 million of property assets, net of outstanding loans, regardless of how many people make up the tax household.

2. The IFI tax base

While the ISF included other assets such as savings, financial investments, shares or luxury boats, the IFI base is limited to non-professional property, namely:

• Undeveloped land: building plots and agricultural land.
• Built property: main residence, houses, flats and their outbuildings (garage, parking space, cellar).
• Buildings or parts of buildings represented by shares in property companies.
• Units in property investment companies (SCPI) and collective property investment funds (OPCI).

A single person owning a Paris loft worth €700,000 and inheriting a country house worth €800,000 is therefore liable for the IFI.

3. How is it declared?

It is up to the taxpayer to value their assets on 1 January of the year of declaration. Once the €1.3 million threshold is passed, the declaration is filed together with the income tax return using form 2042-IFI, or form 2042-IFI-NOT where no income tax return is filed. For net taxable assets between €1,300,000 and €2,570,000, form 2042 C is attached to the income tax return. Above €2,570,000, or for non-residents without French-source income holding more than €1,300,000, form 2725 applies.

What about children's assets? Those belonging to minor children are included in the parents' assets and may be split between them where separate returns are filed. Assets belonging to adult children are excluded from the parents' IFI, even if they remain attached to the household: once an adult child holds more than €1,300,000 of net taxable assets, they file their own return.

4. How the IFI is calculated

Like income tax, the IFI is progressive: the larger your assets, the higher the tax. The scale has remained identical to that of the ISF.

Important: taxpayers are liable once their net taxable assets reach at least €1,300,000. Once liable, however, the calculation starts at €800,000.

5. Reliefs and exemptions

As under the ISF, the value of the main residence benefits from a 30% allowance. Other levers reduce the IFI, or exempt you from it altogether:

• Donations to public-interest bodies: associations, foundations, research or higher education institutions. The reduction is 75% of the amounts given, capped at €50,000.
• Selling property to bring your assets below the €1,300,000 threshold.
• Professional property used for your main business activity, which falls outside the base.
• Furnished letting, for taxpayers generating more than €23,000 of receipts and deriving more than 50% of the household's professional income from it.
• Investment in unlisted SMEs.
• Woodland and forests, exempt up to 75% of their value, subject to conditions.

If your assets fall between €1,300,000 and €1,400,000, tax relief is applied to your IFI, calculated as €17,500 minus 1.25% of the net taxable value of the assets. Such planning is prepared in advance, as is the inheritance of an exceptional property.

6. Deductible debt

A debt is deductible from the IFI where it relates to property, exists on 1 January of the tax year, is owed by the person liable for the IFI, and was taken out to acquire property assets or rights, or to finance repair, extension or maintenance works.

Did you know? Your property tax is also deductible from the IFI: only taxes relating to ownership qualify, unlike taxes levied on individuals such as the housing tax.

7. Where ownership is split

The usufructuary declares assets subject to a usufruct at their full ownership value, except in certain cases where the usufruct and the bare ownership are taxed separately: a split arising from inheritance, the sale of the bare ownership with retained usufruct, the gift or bequest of a usufruct to certain legal entities, or the contribution of bare ownership to a company.

Where a property is divided as part of an inheritance, each person declares the respective value of their rights. The same rule applies where the split follows the sale of the bare ownership to a third party while the seller retains the usufruct. Investors in period property may also want to read about the Malraux law and the VIR.

Three key points to remember

• The IFI replaces the ISF and is now limited to non-professional property.
• The IFI is a progressive tax whose scale remains unchanged, including in 2026.
• Legal ways exist to reduce or avoid it: donations, furnished letting, investment in unlisted SMEs, woodland and forests.

Conclusion

The IFI remains a technical tax, where the declared value of each asset directly drives the final bill. A rough valuation can prove costly, in either direction. To review the real value of your portfolio, talk to a Capifrance property consultant near you.

FAQ

From what amount is the IFI payable in 2026?

As soon as your net taxable property assets reach €1.3 million on 1 January. The tax calculation nevertheless starts at €800,000 once that threshold is crossed.

Is the main residence taxed under the IFI?

Yes, but its value benefits from a 30% allowance, provided it is held directly. Held through an SCI, it does not qualify for that allowance.

Which debts can be deducted from the IFI?

Outstanding property loans, debts for repair, maintenance or extension works, and property tax. Income tax and housing tax are not deductible.

How can you legally reduce your IFI?

By donating to public-interest bodies, with a 75% reduction capped at €50,000, by investing in unlisted SMEs, by holding woodland and forests, or by reducing the net value of your property assets.

Also worth reading on the blog

• Everything about the inheritance of an exceptional property
• Malraux law: what is the VIR?
• Luxury property trends: towards a market recovery
• Selling a listed historic building: the rules to know
• Selling a vineyard or wine estate: expert advice

Author :

Frédéric Rémy - Commercial Performance Director​

A property professional for several years within the Capifrance network, I would like to share with you essential advice to help you succeed in your property project with our consultants.