French wealth tax (IFI): who pays, how it is calculated and what treaties change

France abolished its general wealth tax in 2018, and many assume that the subject ended there. It did not. Since 1 January 2018, the French wealth tax has taken the form of the impôt sur la fortune immobilière (IFI), a tax on real estate wealth^[1]. If you own property in France worth more than €1.3 million, whether you live in Paris, London or New York, you may have to file an IFI return every year. This guide explains who pays it, how it is calculated in 2026, which debts you can deduct, how property held through a company is caught, and what the France-UK and France-US tax treaties change.

What is the French wealth tax (IFI)?

Article 964 of the French General Tax Code (CGI) creates an annual tax on real estate assets, the IFI^[1]. Unlike the former wealth tax (ISF), it ignores bank accounts, shares in trading companies, bonds and most other financial assets. It targets only real estate, held directly or indirectly, valued on 1 January of each year^[2][8].

The tax is assessed per household. For IFI purposes, the household covers a single person, a married couple or civil partners living together, and also unmarried partners in a stable relationship, together with the minor children whose assets they administer^[8]. One return is filed for all the property owned by its members^[8]. The threshold, rates and main rules described below are those applied by the official 2026 IFI return^[8].

Who pays French wealth tax: residents and non-residents

Everything depends on your tax residence on 1 January. French tax residents are taxed on their real estate located in France and abroad, once the net taxable value exceeds €1,300,000^[1]. Non-residents are taxed only on their French real estate, including the fraction of shares in companies that represents French property^[1][9]. A family living in Surrey with a chalet in the Alps and a Paris flat is therefore within scope if those properties exceed the threshold, net of debts.

Moving to France: the five-year relief for new residents

French law contains an important relief for people who settle in France, whatever their nationality. If you were not tax resident in France during the five calendar years before becoming resident, you are taxed only on your French real estate for a limited period of five years^[1][8]. Your house in the Cotswolds or your apartment in Manhattan stays outside the IFI base during that period.

However, individuals referred to in the first paragraph of this 1° who were not tax domiciled in France during the five calendar years preceding the year in which they become tax domiciled in France are taxable only in respect of the assets referred to in 2°.

French General Tax Code, article 964, 1° (unofficial translation) ^[1]

If you own French property from abroad, our guide on the taxes still due in France as a non-resident covers the other French taxes involved.

Which assets are subject to French wealth tax?

Taxable assets include all built property, whatever its use: your main home, a holiday home, let property, property under construction, as well as rights such as usufruct^[8]. Building land, farmland and other unbuilt property are also included^[8]. Each asset is declared at its market value on 1 January, which you determine under your own responsibility^[8].

Several categories are exempt, in full or in part^[7][8]:

• property used for your main professional activity, carried on personally or through a company, under strict conditions;
• woods and forests and shares in forestry groups, exempt for three quarters of their value, subject to management commitments;
• rural property let on long leases and certain agricultural land groups, partly or fully exempt depending on the conditions met.

Furnished lettings deserve a specific mention, because they are common among foreign owners. A furnished let is only treated as a professional asset if the owner receives more than €23,000 of annual rental receipts, the income from this letting represents more than 50% of the household’s professional income, and the letting is their main activity^[7][8]. A holiday flat let a few weeks a year remains fully taxable.

The 30% allowance on your main home

The value of the home occupied by its owner as their main residence is reduced by 30%^[3]. A Bordeaux house worth €1,500,000 used as your main home is therefore declared at €1,050,000, below the threshold if you own nothing else. Only one property per household can benefit from the allowance^[8]. The allowance is of no help to a non-resident whose French property is a second home.

By way of derogation from the second paragraph of article 761, a 30% allowance is applied to the real market value of the property where it is occupied as a main residence by its owner.

French General Tax Code, article 973, I, second paragraph (unofficial translation) ^[3]

Property held through an SCI or other companies

Holding French property through a company does not take it outside IFI. Many foreign buyers use a French SCI (société civile immobilière), and some use foreign companies. In both cases, the shares are taxable to the extent of the fraction of their value that represents taxable real estate, held directly or indirectly by the company, whether the company is established in France or abroad^[2][8].

The law also neutralises a number of debts inside companies. When shares are valued, loans granted by the shareholder or their family to finance taxable property, and debts unrelated to a taxable asset, are in principle disregarded^[8].

Some holdings are left out. Shares in a company carrying on an industrial, commercial, craft, agricultural or professional activity are ignored if your household holds less than 10% of its capital and voting rights^[2]. Conversely, the fraction of a unit-linked life insurance policy invested in real estate funds is included in the policyholder’s taxable assets^[8].

The 2026 Finance Act adds a new tax for asset-holding companies. For financial years ending on or after 31 December 2026, a 20% tax applies to certain non-business assets (yachts, racehorses, jewellery, wine, homes reserved for the controlling individual’s use, among others) held by a company subject to corporate tax whose assets are worth at least €5 million, which is at least 50% controlled by an individual and which draws more than half of its income from passive sources^[14]. If the company is established abroad, the tax is due by the French-resident individuals who control it^[14]. To avoid a double charge, shares that have borne this tax for the company’s financial year ending in the year before 1 January are exempt from IFI^[15]: the first IFI that can be affected is therefore the one assessed on 1 January 2027.

Which debts can you deduct from IFI?

Debts existing on 1 January, actually borne by the household and relating to taxable assets, are deductible: loans to buy the property or the shares, loans for repair, improvement or construction work, and property taxes such as taxe foncière^[4][8]. The IFI due for the year itself is also treated as a deductible liability^[8].

The deduction is subject to several limits^[4][8][13]:

• interest-only loans (prêts in fine), common in British and American financing, are not deductible at their full outstanding amount: the deductible amount is reduced each year as if the loan were repaid in equal instalments over its term;
• loans with no fixed term are reduced by one twentieth per year elapsed;
• family loans are not deductible when granted by a member of the household, and loans from parents, children, brothers or sisters, or from a company you control, are only deductible if you prove normal terms and actual repayments.

Finally, for large estates, a global cap applies when taxable assets exceed €5 million.

Where the market value of the taxable real estate assets and shares exceeds €5 million and the total amount of debts allowed as a deduction under I, II and III for the same tax year exceeds 60% of that value, the amount of debts above that threshold is deductible only up to 50% of that excess.

French General Tax Code, article 974 (unofficial translation) ^[4]

This cap does not apply to debts which the taxpayer shows were not taken out for a mainly tax-driven purpose^[8].

How is French wealth tax calculated? The 2026 rates

Once the net taxable value exceeds €1,300,000, the tax is calculated on a progressive scale which starts at €800,000^[5][8]. In other words, the €1.3 million threshold determines whether you pay, but once you are liable the slice between €800,000 and €1.3 million is taxed too.

The relief (décote) softens the entry into the tax: for a net taxable value of €1,350,000, the scale gives €2,850 (€2,500 on the 0.50% band and €350 on the 0.70% band), reduced by €17,500 minus 1.25% of €1,350,000, that is €625, leaving €2,225^[5].

The IFI cap: 75% of income, for residents only

French residents benefit from a cap (plafonnement): if IFI plus the income taxes due in France and abroad on the previous year’s income exceed 75% of the household’s worldwide income, IFI is reduced by the excess^[6][8]. The law reserves it to taxpayers with their tax domicile in France^[6]: a non-resident cannot use it.

When and how to file a French wealth tax return in 2026

IFI is declared at the same time as income tax, using form 2042-IFI and its schedules^[8]. In 2026, the online filing deadline was 21 May for non-residents and for French départements 01 to 19, 28 May for départements 20 to 54 and 4 June for départements 55 to 976; paper returns had to be filed by 19 May 2026^[8].

Non-residents who do not file a French income tax return use a simplified cover form without income, form 2042-IFI-COV, together with the IFI return, and deal with the tax office for non-residents^[8][9]. A tax notice is then issued, in almost all cases in August, with payment due by 15 September (15 September 2026 for this year’s IFI)^[8]. Any amount above €300 must be paid online (or by direct debit)^[8].

French wealth tax and tax treaties: UK and US owners

IFI applies subject to international tax treaties^[10]. Many treaties were signed when France had the former ISF. The French administration carries over to IFI the principles used to interpret them for ISF, but states that a treaty applicable to ISF is not necessarily applicable to IFI: the wording of each treaty decides^[10]. Its IFI guidance also confirms that a treaty may exclude the foreign assets of nationals of the other State who become French resident, a relief never available to French nationals^[16]. Where a French resident pays a similar wealth tax abroad on foreign property, French law also allows that foreign tax to be credited against IFI, within the French tax on that property^[7][8].

The France-UK tax treaty and IFI

The France-UK treaty signed in London on 19 June 2008 covers taxes on income and capital gains. It lists no wealth tax among the taxes covered, and its article 2(2) only extends it to identical or substantially similar taxes added to, or replacing, those income and capital gains taxes^[11]. Its only wealth tax provision, article 29(3), names the former ISF: for a UK national without French nationality who becomes resident in France, assets located outside France were excluded from the ISF base for five years^[11]. On the treaty’s own wording, IFI is therefore not a covered tax, and article 29(3), which refers to ISF alone, does not apply to it. British nationals moving to France who were not French resident in the previous five calendar years rely instead on the five-year relief in article 964 of the CGI, which applies whatever the nationality^[1].

The France-US tax treaty and IFI

The France-US treaty of 31 August 1994, by contrast, covers taxes on income and capital: it applies to French taxes on total capital or on elements of capital, names the former wealth tax (ISF), and extends to identical or substantially similar taxes imposed after its signature in addition to, or in place of, the existing ones^[12]. IFI, a tax on one element of capital that replaced ISF, therefore falls within the treaty. Under its article 23, real property is taxable in the country where it is located, as are shares in a company at least 50% of whose assets consist of, or which derives at least 50% of its value from, real property in that country^[12]. A US resident who owns a flat in Nice, directly or through such a company, therefore remains within the scope of IFI. Article 23(6) also excludes, for five years, assets located outside France owned by a US citizen without French nationality who becomes resident in France, with a new five-year period if they return after at least three years abroad^[12]. As IFI replaced ISF within the treaty’s scope, this clause applies to IFI alongside the article 964 relief^[1][16].

Real estate also raises inheritance questions that IFI planning should not ignore. If you own property in France, our guide to French inheritance tax completes this analysis.

Reviewing your French property holdings with a tax lawyer

The French wealth tax looks simple, a single threshold and a short scale, but the details decide the bill: valuation, the treatment of interest-only loans and family loans, holdings through an SCI or a foreign company, the five-year relief for new residents and the reach of older treaties. A lawyer specialising in international taxation can review your structure, secure your returns and anticipate the effect of a move to or from France.

Do you hold French real estate, or are you planning to settle here? Alexis Germe, tax lawyer at the Bordeaux bar, advises British, American and other international clients on their French real estate taxation. Schedule a review of your IFI position, with the list of your French properties and how each one is held.

Sources and reference texts

1. Article 964 of the French General Tax Code, scope of the IFI, current version (Légifrance)
2. Article 965 of the French General Tax Code, taxable assets and shares, current version (Légifrance)
3. Article 973 of the French General Tax Code, valuation and main residence allowance, current version (Légifrance)
4. Article 974 of the French General Tax Code, deductible debts, current version (Légifrance)
5. Article 977 of the French General Tax Code, rates and relief, current version (Légifrance)
6. Article 979 of the French General Tax Code, IFI cap, current version (Légifrance)
7. French General Tax Code, articles 964 to 983, real estate wealth tax, including exemptions (articles 975 and 976) and foreign tax credit (article 980) (Légifrance)
8. Impôt sur la fortune immobilière 2026, official notice and form 2042-IFI (impots.gouv.fr, in French)
9. Non-residents: how and where to declare and pay IFI (impots.gouv.fr)
10. BOFiP, BOI-PAT-IFI-10, IFI scope, paragraph 30 on tax treaties (published 08/06/2018)
11. Convention between France and the United Kingdom of 19 June 2008 on taxes on income and capital gains, articles 2 and 29 (impots.gouv.fr, in French)
12. Convention between France and the United States of 31 August 1994 on taxes on income and capital, consolidated version, articles 2 and 23 (impots.gouv.fr, in French)
13. BOFiP, BOI-PAT-IFI-20-40-10, conditions for deducting debts (published 05/06/2024)
14. Article 235 ter C of the French General Tax Code, tax on non-business assets held by companies, created by article 7 of Finance Act no. 2026-103 of 19 February 2026, current version (Légifrance)
15. Article 975 of the French General Tax Code, IFI exemptions, including VII on shares subject to the article 235 ter C tax, current version (Légifrance)
16. BOFiP, BOI-PAT-IFI-10-20-20, IFI, persons domiciled in France, paragraph 1 on treaty relief for nationals of the other State (published 08/06/2018)