- IFI (Impôt sur la Fortune Immobilière) only taxes real estate — shares, bonds, pensions, and Assurance Vie contracts are all excluded, unlike the old ISF wealth tax it replaced in 2018
- It only applies once your net taxable property wealth exceeds €1.3 million, and if you're a new arrival, you get a 5-year "holiday" where only French property counts, not your worldwide assets
- Your main residence gets a 30% valuation discount before the threshold is even calculated
- You must still file an IFI return even if you owe no income tax at all — the two are entirely separate declarations
If you own property in France and you're picturing a wealth tax on everything you've built up over a lifetime — savings, pension, investments — you can relax on that front. IFI only looks at real estate. Your Assurance Vie, your pension, your bank accounts and share portfolio are all outside its scope entirely. The real question is whether your property wealth alone crosses €1.3 million, and if you're newly arrived in France, whether the 5-year rule protects your UK property from counting at all.
For a broader overview of how the French tax system works, see How the French Tax System Works.
What IFI Actually Taxes — and What It Doesn't
IFI replaced France's older wealth tax, ISF, in 2018. The change that matters most for anyone with savings outside property: ISF taxed your entire net worth, IFI taxes only real estate.
That means the following are excluded entirely, regardless of value: bank accounts, shares, bonds, Assurance Vie contracts, and UK or French pensions. If you've been moving wealth out of property and into these vehicles, that's precisely why — it's a widely used, entirely legal way to reduce IFI exposure.
What does count: your main home and any holiday homes, rental property (furnished or unfurnished), shares in a property company such as an SCI or SCPI, the real-estate portion of diversified investment funds (OPCI), unbuilt land including agricultural land not used for your own profession, and usufruit (usufruct) rights — the usufruitier is generally taxed on the property's full market value.
The 2026 Thresholds and Rate Scale
IFI is triggered once your net taxable real estate exceeds €1.3 million as of 1 January of the tax year. If you cross that line, the tax itself is calculated starting from €800,000, not from zero — everything below that threshold is untaxed.
| Net Taxable Value of Real Estate | 2026 Tax Rate |
|---|---|
| €0 to €800,000 | 0% |
| €800,001 to €1,300,000 | 0.50% |
| €1,300,001 to €2,570,000 | 0.70% |
| €2,570,001 to €5,000,000 | 1.00% |
| €5,000,001 to €10,000,000 | 1.25% |
| Over €10,000,000 | 1.50% |
There's also a tapering relief (décote) for anyone whose assets fall just over the €1.3 million line, between €1.3 million and €1.4 million, so a small overshoot doesn't trigger a disproportionate bill.
The 5-Year Holiday Rule
This is the single most valuable rule for anyone recently arrived in France, and it's the one that's often missed.
If you were not a French tax resident at any point in the 5 years before your move, you qualify for the "impatriate" rule: for your first five years of French residency, IFI only applies to French-situs property. Your UK home, any UK rental property, anything you own outside France — none of it counts toward the threshold during this window.
Once you pass the 5-year mark, that changes completely: you become liable for IFI on your worldwide real estate, UK property included.
If you're a non-resident — living in the UK with a French holiday home, for example — you're only ever liable on your French property, regardless of how long you've owned it, provided its net value exceeds €1.3 million on its own.
For more on how French tax residency is determined, see our guide to French tax residency rules.
Valuing Your Property: the 30% Main Residence Discount
Valuations are based on open market value as of 1 January, as determined by the French tax authorities (the Fisc).
If you're a French tax resident, your main residence gets a 30% reduction on its market value before anything else is calculated. This single allowance is often enough to bring a household back under the €1.3 million threshold entirely.
You can also deduct genuine debts tied to the property, provided they exist on 1 January: outstanding mortgage capital for acquisition or improvement, Taxe Foncière (though not Taxe d'Habitation), and committed renovation or maintenance costs.
One thing worth knowing if you're financing with an interest-only mortgage: for IFI purposes, "in fine" loans are no longer fully deductible for the whole term. Instead, the deductible amount must be calculated as if the capital were being repaid evenly (linearly amortised) over the loan term, which reduces what you can deduct each year compared with the loan's actual structure.
How IFI Interacts with Social Charges
IFI is an income tax — not a social charge — and it is separate from the prélèvements sociaux applied to investment and rental income. Holding your S1 certificate reduces your social charges on pension income, but it has no effect on your IFI liability. For detail on how social charges work alongside your other French tax obligations, see social charges in France.
Common Mistakes
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Assuming IFI applies to savings and pensions like the old ISF did. It doesn't — only real estate is in scope since 2018.
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Forgetting to file an IFI return because no income tax is owed. IFI is a completely separate declaration (via Form 2042-IFI, filed alongside your income tax return) — your income tax position has no bearing on whether you need to file it.
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Missing the 5-year holiday and voluntarily declaring UK property too early. New residents should double-check this window applies before assuming their worldwide property counts.
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Overlooking the 30% main residence discount, which can single-handedly bring a household back under the threshold.
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Treating an "in fine" interest-only mortgage as fully deductible. For IFI, it must be linearly amortised instead.
Frequently Asked Questions
Do I have to file an IFI return if I don't pay French income tax?
Yes. IFI is a separate declaration from income tax. Even if your income is below the income tax threshold, you must file an IFI return if your net property assets exceed €1.3 million, typically via Form 2042-IFI alongside your annual return.
Are my UK properties included in the €1.3 million threshold?
It depends on how long you've been a French resident. If you've been resident for more than 5 years, yes — your worldwide real estate, including UK homes and rental property, counts. If you've been resident for less than 5 years, only your French property counts.
What happened to the old ISF wealth tax?
ISF (Impôt de Solidarité sur la Fortune) was replaced by IFI in 2018. The main change was excluding all non-real-estate assets — cash, investments, and similar — from the tax base entirely.
Can I use the UK's Principal Private Residence exemption for my main home?
No. France applies its own rules. Your main residence is included in the IFI calculation, though French residents do get a 30% reduction on its value.
Does Assurance Vie help reduce IFI exposure?
Yes, indirectly. Since only real estate is taxed, moving wealth out of property and into Assurance Vie or other financial vehicles reduces what counts toward your IFI threshold — it's one of the more common planning strategies for UK residents with substantial property wealth. For a broader look at tax-reduction strategies available to UK expats in France, see how to reduce your French tax bill.