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IFI-Impôt sur la Fortune Immobilière (Tax on Immovable Wealth)—is France's wealth tax, introduced in 2017 as a replacement for the older ISF (Impôt de Solidarité sur la Fortune). Unlike income tax or capital gains tax, IFI is an annual wealth tax charged on the total value of an individual's net taxable assets as at 1 January each year.
The key principle: if your net taxable wealth exceeds €1.3 million as of 1 January 2026, you are subject to IFI. The tax applies progressively, with rates rising from 0.55% on the lowest bracket to 1.5% on the highest.
IFI applies to: - Individuals (not companies) resident in France for tax purposes - Non-residents who own immovable property (real estate) in France - EU citizens who have established tax residency in France - British expats living in France (or abroad but with significant French property assets)
Certain assets are specifically exempt from IFI: - Pensions (including UK state pensions and private pensions) - Life insurance proceeds and assurance-vie contracts (after 8 years, subject to conditions) - Business assets where you hold <25% of ownership - Certain artistic and literary rights
These exemptions are important for expats. A British expat with a substantial UK pension is not subject to IFI on that pension, even if their other wealth exceeds the threshold.
As at 1 January 2026, the IFI threshold is €1.3 million. This is the net value of your taxable assets. If your net taxable wealth is €1.29 million, you do not pay IFI. If it is €1.31 million, you do.
Net taxable wealth is the total value of all taxable assets minus debts. It includes: - Real estate (primary residence, investment property, land) - Financial assets (stocks, bonds, managed funds, cash deposits) - Art, jewellery, and collectibles (valued >€5,000) - Business interests and shareholdings (where ownership ≥25%) - Rights and intellectual property
Debts that reduce net taxable wealth include: - Mortgages on real estate - Loans used to purchase or improve taxable assets - Investment-related liabilities
A British expat in Paris: - Primary residence: €600,000 - Holiday apartment in the Dordogne: €300,000 - Cash and investments: €250,000 - Mortgage on primary residence: -€150,000
Gross taxable assets: €1.15 million Minus mortgage: €150,000 Net taxable wealth: €1.15 million
This expat is below the €1.3 million threshold and does not pay IFI.
Importantly, once you exceed the threshold, you pay IFI on the full amount (subject to the relief for amounts €1.3m-€1.4m, discussed below). You do not pay IFI on wealth below €1.3 million and then start paying on amounts above. The tax is charged on the total, progressively.
IFI is structured as a progressive tax. Your marginal rate depends on your total net taxable wealth. Here is the 2026 bracket structure:
Net Taxable Wealth | Marginal Rate | Cumulative Tax | €800,000 - €1.3m | 0.55% | Varies | €1.3m - €2.57m | 0.75% | ~€3,850 + 0.75% on excess | €2.57m - €5.14m | 1.0% | ~€13,605 + 1.0% on excess | €5.14m - €10.29m | 1.25% | ~$41,205 + 1.25% on excess | Over €10.29m | 1.5% | ~$107,625 + 1.5% on excess
Example 1: Net Taxable Wealth €2 million - First €1.3m taxed at 0.55-0.75% (blended): ~€7,500-€8,000 - Next €700,000 taxed at 0.75%: €5,250 - Total IFI: ~€12,750-€13,250 annually
Example 2: Net Taxable Wealth €1.5 million - First €1.3m: ~€7,500-€8,000 - Next €200,000 at 0.75%: €1,500 - Relief (€1.3m-€1.4m band): subject to €17,500 - 1.25% × €1.5m = €17,500 - €18,750 = capped at minimum - Actual IFI: €1,500-€2,500 (relief limits the burden)
French tax law recognises that a cliff-edge at €1.3 million is harsh. For taxpayers with net wealth between €1.3m and €1.4m, a formula-based relief applies:
IFI liability = €17,500 - 1.25% of net taxable assets
This means that for someone with €1.35 million in net wealth: - Straight calculation at 0.75% on €1.35m = €10,125 - Relief formula: €17,500 - (1.25% × €1.35m) = €17,500 - €16,875 = €625 - Actual IFI due: €625 (much less than the straight calculation)
This relief phase-in zone (€1.3m-€1.4m) is material for expats hovering just above the threshold.
One of the most valuable IFI reliefs is the primary residence abatement. Your principal residence (résidence principale) is valued at 30% less for IFI purposes.
If your main home is valued at €600,000, the taxable value for IFI is €600,000 × 70% = €420,000. This is a material reduction.
For a British expat with a €600,000 primary residence and total net wealth of €1.5 million: - Without abatement: taxable wealth €1.5m, IFI ~€2,500 - With abatement: taxable wealth €1.42m (€1.5m minus €80,000 in relief), IFI ~€1,650 - Annual saving: ~€850
Over a 20-year retirement, this is €17,000+ in tax savings from a single relief.
Your home must be: - Designated as your principal residence (résidence principale) in your French tax filings - Your main dwelling where you live the majority of the year - Not let out as a holiday rental (this changes the status)
A secondary home (e.g., a holiday villa in Provence) does not qualify for the abatement and is taxed at full value.
If you are married, the household gets only one 30% abatement—applied to the jointly owned primary residence or, if separate assets, to one spouse's principal residence. A couple with two homes must choose which qualifies.
For some expats, ensuring the primary residence abatement is maximised is key. If you have a choice between declaring a valuable property as your principal residence or a secondary home, the principal residence status saves 30% of value on IFI-a substantial benefit.
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IFI is a comprehensive wealth tax. Nearly all asset types are included unless specifically exempt.
Real Estate - Principal residence - Investment property (apartments, villas, land) - Commercial property (if privately owned) - Parking spaces and storage facilities
Valuation: based on estimated fair market value as at 1 January, typically assessed via recent comparable sales or professional valuation.
Financial Assets - Stocks and shares (including UK shareholdings) - Bonds and government securities - Mutual funds and investment funds - Managed investment accounts - Cash deposits and savings accounts (above €1,500)
Valuation: based on market value at 1 January.
Art, Jewellery, and Collectibles - Paintings, sculptures, and artwork (if valued >€5,000) - Jewellery and watches - Rare wines and collectible motor vehicles - Antiques (if valued >€5,000)
Valuation: based on expert appraisal or fair market value.
Business Interests and Rights - Shareholdings where you own ≥25% of the company - Partnership stakes - Intellectual property and royalties - Agricultural land and forests
Valuation: typically based on the company's net asset value or an independent valuation.
Pensions - UK state pensions - UK private pensions (even substantial balances) - French occupational pensions
This exemption is valuable for expats. A British expat with a €400,000 private pension is not subject to IFI on that amount, even if total wealth exceeds €1.3 million.
Life Insurance and Assurance-Vie - Assurance-vie policies (after 8 years, with conditions) - Life insurance contracts with named beneficiaries
This exemption makes assurance-vie attractive for wealth accumulation in France. The investment grows free from annual IFI.
Business Assets - Shareholdings <25% (passive investments) - Certain professional business assets
Debts reduce your taxable wealth, so they are deducted from gross assets: - Mortgages on real estate - Loans used to purchase or improve taxable assets - Investment-related borrowings
Debts unrelated to assets (e.g., personal credit card debt) are not typically deductible.
IFI rules differ depending on whether you are classified as a French tax resident.
If you are habitually resident in France (or meet other residency tests for French tax purposes), you are liable to IFI on your worldwide assets, subject to exemptions.
This means: - Your UK property (even if you do not visit it often) is subject to French IFI - Your UK pensions are exempt (as discussed above) - Your UK investments and bank accounts are subject to IFI - Your UK artwork and collectibles are subject to IFI (if valued >€5,000)
For many British expats, this global IFI reach is a surprise. They assume France only taxes French property, but French tax residents must declare worldwide wealth.
If you are not a French tax resident (i.e., you maintain UK residency or residency elsewhere) but own immovable property in France, you are subject to IFI only on that French real estate.
For example: - A UK resident British expat who owns a villa in Provence is subject to French IFI only on that villa's value (and any French financial assets) - That expat's UK property, UK investments, and worldwide wealth are not subject to French IFI - However, they may be subject to UK wealth taxes or other jurisdictions' rules
This creates planning opportunities. Some British expats structure their property holdings to maintain UK residency and avoid the global IFI reach of French residency.
French tax residency is based on: - Where you have a permanent home (owned or rented) - Where your family centre of interest is - Where you exercise a professional activity - Where you have habitual residence
One factor may be sufficient. A British expat who rents a home in Paris, has family there, and works there is a French tax resident—even if they retain a UK property or UK citizenship.
If you are subject to IFI, you must file an annual wealth tax return.
IFI is declared as part of your annual income tax return (déclaration de revenus) filed with the French tax authority. For 2026 (covering assets as at 1 January 2026), the deadline is typically 15 June 2026 for online filing (or earlier for paper returns).
Late filing incurs penalties: 10% of unpaid tax for a delay up to one month, and higher percentages thereafter.
Your IFI declaration must include: - Detailed inventory of all real estate (with location, estimated value, outstanding mortgages) - Financial assets (stocks, bonds, managed funds, cash balances) - Art, jewellery, and collectibles (valued >€5,000) - Business interests (with percentage ownership) - Debts and liabilities - Claim for exemptions (pensions, assurance-vie, etc.)
The French tax authority expects valuation to be fair and reasonable. For real estate, recent comparable sales or a professional appraisal is prudent. For investments, market values are used. For art and collectibles, an expert appraisal is often required.
Retain documentation: property deeds, investment statements, professional valuations, and mortgage documents. The tax authority may request these to verify your declaration.
French residents must file online via the tax authority's digital system. The form is pre-populated with information from previous returns and linked to other tax filings.
IFI is due by 15 June 2026 (or a later date if a payment plan is agreed). Failure to pay incurs interest and penalties.
For British expats with substantial wealth in France, strategic planning can legitimately reduce IFI exposure.
Ensure your principal residence is properly declared. The 30% abatement is a material saving-do not miss it by incorrectly declaring a secondary home as your main residence.
Assure-vie is IFI-free (after 8 years). If you have annual income surplus, consider directing it into an assurance-vie policy rather than a taxable savings account. Over time, this shifts wealth from taxable to exempt status.
Similarly, if you have a UK pension, it is exempt from French IFI. Maximising pension contributions (if eligible) is tax-efficient in France.
Life insurance proceeds are exempt from IFI if designated to specific beneficiaries. For a UK expat wanting to pass wealth to a spouse or child outside the IFI system, an insurance policy can be an effective structure.
Debts reduce taxable wealth. If you are purchasing a property or investment, a mortgage or loan can reduce your net IFI liability. However, this must be considered in context-the interest cost and other tax implications matter.
A UK expat inheriting €1.5 million and considering investment might structure a mortgage (or loan against assets) to leverage the debt deduction and reduce IFI.
For non-residents, only French real estate incurs IFI. Some UK residents with French property consider whether shifting investment focus to UK-based assets (outside French IFI reach) aligns with their plans. This is a significant decision and depends on investment strategy, not just tax.
Each spouse has their own IFI threshold (€1.3 million). For married couples, structuring assets to ensure both spouses have below-threshold wealth can eliminate IFI entirely.
Example: A couple with €2.4 million in wealth. If all assets are in one spouse's name, they pay ~€2,500/year in IFI. If split equally (€1.2m each), neither spouse exceeds the threshold and IFI is zero.
This requires careful structuring-matrimonial property regimes, gift considerations, and ownership documentation all matter.
Charitable donations to French-recognised charities reduce taxable wealth. For expats with philanthropic interests, structured charitable giving can reduce IFI while supporting causes they care about.
IFI is based on estimated fair market value. For properties and art, valuations can vary. Maintaining recent, professional valuations ensures you are not overstating asset values and paying excess IFI.
For some high-net-worth individuals, a holding company structure (though complex) can defer or restructure wealth. This requires specialist advice and is not appropriate for most expats, but it exists as an option for very substantial wealth.
Many UK expats assume France only taxes French assets. In fact, French residents are subject to IFI on worldwide wealth. Your UK property, UK investments, and worldwide collectibles are all taxable.
Fix: Understand your residency status. If you are a French tax resident, declare worldwide assets. If you remain a UK resident, only French property is subject to French IFI.
The 30% abatement is automatic in principle but only if you designate your home as your principal residence. Expats who file returns without making this designation miss the relief.
Fix: Explicitly declare one property as your résidence principale on your tax return. Retain documentation (utility bills, voter registration, proof of residence) to support the claim.
Some expats calculate IFI on the gross value of property without deducting the outstanding mortgage. Debts reduce net taxable wealth.
Fix: Include all mortgages, loans, and investment-related liabilities in your return. Net taxable wealth = gross assets minus debts.
Some expats, wanting to be conservative, overstate property and art valuations. This increases IFI unnecessarily. The tax authority expects reasonable, market-based valuations.
Fix: Use comparable sales data for property, market values for investments, and professional appraisals for art and collectibles. Keep documentation.
Pensions, assurance-vie (after 8 years), and life insurance proceeds are exempt but only if declared as exempt. Some expats list all assets without identifying which are exempt.
Fix: Clearly identify exempt assets on your return. If you claim an exemption for a pension or assurance-vie, provide documentation.
Missing the 15 June deadline incurs penalties (10%+ of unpaid tax). Some expats, unfamiliar with French filing requirements, miss the deadline and incur significant penalties.
Fix: File online before the deadline. Set a calendar reminder. If you cannot file by the deadline, request an extension (though penalties may still apply for late payment).
Property values change. An expat who declared a villa as worth €400,000 five years ago should revalue it annually. Undervaluing assets saves IFI but invites scrutiny.
Fix: Update property valuations annually using recent comparable sales or a professional appraisal. Maintain documentation.
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IFI and French succession law interact in important ways.
IFI is an annual tax. Over 20 years of retirement, a British expat paying €5,000/year in IFI is transferring €100,000 to the state instead of to heirs. This is material succession planning.
Strategic use of exemptions (assurance-vie, pensions) and reliefs (primary residence abatement) preserves wealth that would otherwise be diverted to IFI.
When you die, your estate is subject to French succession tax (droits de succession) on amounts exceeding the inheritance tax allowances. These rates are separate from IFI but are another layer of wealth transfer tax.
An expat with €2 million in French assets might pay: - €5,000-€10,000 annually in IFI (during life) - €100,000+ in succession tax (at death)
Lifetime planning to reduce IFI often aligns with succession planning-assurance-vie, spousal gifts, and charitable donations reduce both.
Assurance-vie is exempt from IFI and can pass outside the succession (to beneficiaries named in the policy), avoiding forced heirship restrictions. This dual benefit-no IFI during life, no forced heirship at death-makes assurance-vie a cornerstone of expat wealth planning in France.
IFI at 0.55%-1.5% is a material annual tax on wealth above €1.3 million. For a €2 million wealth base, annual IFI can exceed €12,000. Over 20 years, this is €240,000+ diverted from your estate.
However, strategic planning-leveraging exemptions (assurance-vie, pensions), reliefs (primary residence abatement), and debt deductions—can significantly reduce exposure. Spousal structuring, charitable giving, and asset allocation between taxable and exempt vehicles are all legitimate planning tools.
For British expats in France, the combination of IFI, income tax, and succession tax creates a complex environment. Professional tax and wealth planning advice from someone familiar with both French and UK rules is essential. The cost of professional guidance is far less than the tax saved through strategic planning.
Start now-do not wait until you have accumulated significant French wealth to understand the IFI rules. Decisions made early (about matrimonial regime, asset location, and insurance structures) have 20+ year IFI consequences
This article is educational only and not financial or tax advice. IFI rules and rates may change. Individual circumstances vary based on residency status, asset location, and personal circumstances. Consult a qualified French tax adviser or accountant before making decisions. Decisions about asset structure can have tax implications in both France and the UK.
Your principal residence in France is worth 30% less for IFI purposes. This is a material reduction. If your main home is valued at €500,000, it is taxed as if worth €350,000, saving you €825/year in IFI at the top rate. Ensure your home is properly declared as your principal residence (résidence principale) to claim this relief.
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With IFI rates at 0.55%-1.5% and primary residence relief available, strategic planning can save thousands annually. Our wealth tax advisers review your asset structure and identify legitimate IFI reductions.
