French Wealth Tax (IFI) 2026: Threshold, Rates, Who Pays

The French wealth tax has a fearsome reputation and a much narrower reality. The old ISF, which taxed total wealth, was abolished in 2018 and replaced by the IFI — a tax on real-estate wealth only. Portfolios, savings accounts, life insurance and cryptocurrency are completely outside its scope ; what counts is property, held directly or through companies.

The trigger is simple : if your net taxable property wealth exceeds €1.3 million on 1 January, you owe the IFI for that year and must file. Below the threshold : nothing, no filing. The threshold is assessed per household (married couples, civil partners and cohabiting partners combine their property), which catches some couples by surprise.

One 2026 point worth clearing up, because the English-language press covered the debate but rarely the outcome : parliament discussed transforming the IFI into a broader « unproductive wealth tax » (adding cash funds, crypto and luxury goods to the base). The measure was dropped from the final 2026 budget — the IFI applies unchanged : same €1.3 million threshold, same scale, same property-only base.

Your exposure depends on tax residence :

• French tax residents are assessed on their worldwide property — the Paris flat, the London house, the Florida condo all count ;
• Non-residents are assessed on French property only (including shares of property-rich companies like an SCI). A US resident with a €900,000 Provence farmhouse owes nothing ; the same owner with €1.5 million of French property files ;
• New arrivals get a major break : if you move your tax residence to France after living abroad for the previous 5 years, your non-French property stays out of the base for 5 years. A retiree arriving with a French home and a foreign portfolio of houses is only assessed on the French one until the exemption runs out — a point we flag in our guide to retiring to France.

Double-tax treaties generally preserve these rules and credit any comparable foreign wealth tax — a niche issue in practice, since few countries still levy one.

Once you cross €1.3 million, the scale applies to your whole net taxable base starting from €800,000 (the first €800,000 is at 0%) :

Worked example — a non-resident couple with €2 million of French property and a €400,000 outstanding mortgage : net base €1.6 million → €2,500 on the 0.5% slice (800k → 1.3M) + €2,100 on the 0.7% slice (1.3M → 1.6M) = €4,600 a year.

Just over the line ? A décote (taper) softens entry between €1.3M and €1.4M : the discount is €17,500 minus 1.25% of your base. At €1.35 million net, the raw tax of €2,850 is reduced by €625 to €2,225. French residents also benefit from a global ceiling : IFI plus income taxes cannot exceed 75% of annual income — relevant for the asset-rich, income-poor.

Taxable : homes, rental property, land, property held via an SCI or similar company (in proportion to your shares), and real-estate funds (SCPI/OPCI) even inside a life-insurance wrapper.

Outside or exempt :

• All financial assets — shares, bonds, cash, crypto ;
• Professional property : real estate used for your main business activity, including qualifying professional furnished-letting (LMP) businesses ;
• Woods and forests (75% exempt under management commitments) and long-term leased farmland ;
• Your main residence gets a 30% allowance on market value — a €1.5 million home counts for €1.05 million. The allowance does not apply to a residence held through an SCI, one of the classic traps of over-engineered French property purchases.

Valuation is your responsibility, at market value on 1 January. The tax office runs its own comparables and reassessments of under-declared values are routine — document your figure (recorded sales in the street, professional appraisal) rather than guessing.

The IFI taxes net wealth, so debts tied to taxable property reduce the base : outstanding mortgage capital, loans for works, and unpaid property taxes (taxe foncière, but not the rental-income tax). Three anti-abuse rules catch the unwary :

• Interest-only (in fine) loans are deductible only on a declining schedule — you cannot park a bullet loan against the property forever ;
• Family loans and loans from your own company are deductible only under strict, documented conditions ;
• High-wealth cap : above €5 million of property with debts exceeding 60% of value, the excess debt is only partially deductible.

Debt is also the main legitimate planning lever : a leveraged rental purchase adds little to the net base in its early years, whereas a cash purchase adds its full value from day one.

Holding French property through a company does not shelter it from the IFI — the tax looks through the structure. The rules by vehicle :

• SCI (the French family property company) : your shares are taxable in proportion to the property the company holds, minus its qualifying debts. Two traps for foreign owners : the 30% main-residence allowance is lost when the home sits in an SCI, and shareholder loans to your own SCI are only deductible under strict conditions ;
• SCPI and OPCI funds (paper property) : taxable for their property fraction, even when held inside a life-insurance contract — one of the few cases where an insurance wrapper does not shield an asset ;
• Foreign companies : shares of any property-rich entity are taxable for non-residents to the extent of the French real estate they hold — interposing a UK or US LLC changes nothing.

The one genuinely exempt structure is the professional one : property used for your main business activity (offices you operate from, a qualifying furnished-letting business) stays out of the base.

How the SCI itself works — setup, shares, running costs — is covered in our guide to the SCI property company.

The IFI rides on the income-tax return : you file annex 2042-IFI with your French return in May-June, listing each property, its 1 January value and the deductible debts. Non-residents with no French income still file the annex with a shell return through the non-resident tax office. There is no wealth-tax withholding — you receive a notice in the summer and pay online.

Enforcement to take seriously : the tax office can look back up to 10 years where no return was filed, land-registry data gives it every acquisition price, and late-filing interest plus penalties stack up. If you have crossed the threshold quietly through price appreciation — common for owners who bought Paris or coastal property a decade ago — regularising proactively is dramatically cheaper than being caught. The IFI also sits alongside the annual property taxes every owner pays regardless of wealth : see our guide to French property taxes for that layer.