By Alexandre, European Private Office. Last verified July 15, 2026.
The direct answer
IFI starts above EUR1.3 million net, and it is then computed from EUR800,000.
France's Impot sur la Fortune Immobiliere is an annual tax on net taxable real estate held directly or indirectly on January 1. You owe it when net taxable real estate exceeds EUR1.3 million. The most misunderstood mechanic: once you cross that threshold, the progressive scale applies from EUR800,000, not from EUR1.3 million. Crossing the line by one euro does not tax one euro; it taxes the last EUR500,000 at 0.5% and everything above EUR1.3 million at the scale below.
Scope depends on residence. A nonresident American is generally assessed on French real estate only. A French tax resident is assessed on worldwide real estate, except that qualifying new residents keep foreign real estate out of scope during their first five years. The assessment is per household, not per person: spouses, civil partners, cohabiting partners and minor children count together.
The 2026 scale
Six brackets, applied to the net taxable base.
| Net taxable real estate | Rate |
|---|---|
| Up to EUR800,000 | 0% |
| EUR800,000 to EUR1.3 million | 0.5% |
| EUR1.3 million to EUR2.57 million | 0.7% |
| EUR2.57 million to EUR5 million | 1% |
| EUR5 million to EUR10 million | 1.25% |
| Above EUR10 million | 1.5% |
A smoothing rule softens entry: households whose net base falls between EUR1.3 million and EUR1.4 million subtract a discount equal to EUR17,500 minus 1.25% of the base. At EUR1.35 million, for example, the gross tax of EUR2,850 is reduced by EUR625 to EUR2,225. Scale and discount verified against the French administration, July 2026.
Worked example
A EUR2.5 million house, carried end to end.
Illustrative calculation, dated July 2026, reproducible line by line. An American couple, US tax residents, buy a EUR2.5 million second home in Provence with a EUR700,000 acquisition mortgage from a French bank. It is their only French property.
Step 1: base
Market value EUR2,500,000 minus deductible acquisition debt EUR700,000 = net taxable base EUR1,800,000. Above EUR1.3 million, so IFI applies.
Step 2: scale
0.5% on the slice from EUR800,000 to EUR1,300,000 = EUR2,500. Then 0.7% on the slice from EUR1,300,000 to EUR1,800,000 = EUR3,500.
Step 3: result
EUR6,000 a year, or 0.24% of the purchase price, every year the value and debt stay at these levels. As the mortgage amortizes, the base and the bill rise.
Variant: primary residence
If the same couple became French residents and the house were their principal home, a 30% abatement applies first: EUR2,500,000 x 0.70 = EUR1,750,000, minus EUR700,000 of debt = EUR1,050,000. Below EUR1.3 million: no IFI at all. Same house, different facts, different bill.
Variant: no debt
Bought in cash, the base is EUR2,500,000: 0.5% x 500,000 + 0.7% x 1,200,000 = EUR10,900 a year. Financing structure is an IFI decision, not only a treasury one.
The base
What reduces the bill, and what does not.
Debt that counts
Debt contracted to acquire, repair or improve the taxable property is generally deductible. Not all debt qualifies: loans from family members or from companies you control face restrictions, interest-only loans are deducted on a declining schedule as if they amortized, and for estates above EUR5 million a cap limits deductions when debt exceeds 60% of value. Each of these three rules is worked through with numbers below.
Primary residence
A 30% abatement applies to the household's principal home. It does not apply to second homes or to a primary residence held through an SCI.
Professional assets
Real estate genuinely used for your professional activity can fall outside the base under strict conditions. This is a per-file legal question, not a checkbox.
January 1
The photograph is taken once a year. A closing on December 15 puts the property in the next January 1 base; a closing on January 15 buys a year. For arriving residents, the year residence begins also sets when worldwide questions start.
Debt, in detail
Interest-only loans, the 60% cap and related-party lending, with the arithmetic.
Three debt rules decide more IFI files than the scale itself, because affluent buyers rarely finance with a plain amortizing mortgage. Each one is knowable before the offer.
Interest-only (in fine) loans
For IFI, the deductible amount of an in fine loan shrinks every year even though the contract repays the principal only at maturity. The administration deducts a theoretical annual amortization: on each January 1, the deductible balance is the initial principal minus (initial principal x elapsed years / total loan term). A EUR2 million interest-only loan with a ten-year term has a theoretical deductible balance of EUR1.4 million after three elapsed years: EUR2,000,000 minus (EUR2,000,000 x 3 / 10). The contractual balance is still EUR2 million; the IFI base does not care.
Loans with no fixed term
A loan with no repayment date is deducted as if it amortized over twenty years: the deductible amount falls by one twentieth for each year elapsed since the loan was made. Open-ended family or intra-group lending therefore loses IFI value on a fixed clock, whatever the paperwork says about repayment.
The 60% cap above EUR5 million
Under Article 974 IV of the French tax code, the test runs on the household's entire gross taxable real estate, not property by property. When that gross value exceeds EUR5 million and total deductible debt exceeds 60% of it, the fraction of debt above the 60% line is generally deductible only at 50%, unless the taxpayer shows the debt was not contracted mainly for tax purposes. Example: gross taxable property EUR8 million, qualifying debt EUR6 million. The 60% line sits at EUR4.8 million; the EUR1.2 million above it is deductible at half, so EUR600,000. Deductible debt: EUR4.8 million plus EUR600,000 = EUR5.4 million, not EUR6 million, and the taxable base rises by the difference.
Related-party lending
A loan from your own US company does not escape the French rules.
The lender being American changes nothing: when the taxpayer directly or indirectly controls the lending company, France can challenge the deduction. What defends it is normality, documented before the first euro moves: a genuine commercial purpose, an amount consistent with the transaction, an arm's-length interest rate and repayment schedule, executed loan documentation, actual interest payments and repayments on the account statements, and evidence the arrangement was not created principally to reduce IFI. A loan that exists only on paper fails exactly when it is needed.
The practical consequence: financing structure is worth a written IFI opinion whenever the plan involves interest-only debt, family money or an entity you control. The rules above are stated in the French administration's own doctrine, linked at the end of this page, and the arithmetic can be reproduced for your numbers before anything is signed.
Three profiles
The same villa creates three different IFI files.
01
US resident owner
Assessed on French real estate only. The EUR2.5 million example above is this profile. An American who owns in France but lives in London or New York still receives the annual bill when the net base crosses the line.
02
New French resident
Qualifying arrivals who were nonresident for the previous five calendar years keep foreign real estate out of the IFI base through the end of the fifth year after arrival. The US portfolio stays outside while the rule runs; the French home does not.
03
Established resident
From year six, worldwide real estate enters the base, subject to treaty analysis. A household with US real estate should model year six before moving, not in year five.
Ownership structure
Direct, SCI or company: the structure changes the file, rarely the tax.
An SCI does not remove IFI: shares are taxable for the fraction of their value that represents French real estate. What the structure genuinely changes is succession planning, management between family members and the shape of the annual filing. Trusts deserve a separate warning: French law treats trust-held real estate severely for both IFI and reporting, and an American revocable trust holding French property is a known trap. Structure decisions belong with French inheritance planning and licensed counsel before the purchase, because restructuring after closing means transfer taxes.
- 01Will the household's net French base cross EUR1.3 million? Add every French property, subtract qualifying debt. If clearly below, IFI is not your constraint; check again as debt amortizes.
- 02Resident or nonresident on January 1? This sets the scope and whether the five-year rule and the 30% abatement are available.
- 03Cash or financed? Run the worked example both ways; the delta compounds annually.
- 04Direct or structured? Decide with succession, not against it, and never move a US trust near the property without written French advice.
- 05When do you close? Position the closing and the residence date against January 1.
These five questions are answerable before any offer, and they should be: they are part of the property decision itself, alongside financing and the residence route. If you want the pre-purchase sequence mapped for your own situation, start with our pre-move decision audit.
Plain answers
French wealth tax questions Americans ask first.
Does France have a wealth tax?
France has an annual property wealth tax, IFI, focused on taxable real estate rather than a general tax on all financial wealth. It applies when net taxable real estate exceeds EUR1.3 million on January 1.
How much is IFI on a EUR2.5 million French home?
Illustratively, as of July 2026: about EUR10,900 a year if held debt-free by a nonresident, about EUR6,000 with EUR700,000 of deductible acquisition debt, and potentially zero if it is a resident household's primary home with the same debt, because the 30% abatement brings the base under the threshold.
Can a nonresident American owe French IFI?
Yes. Subject to treaty rules, a nonresident owes IFI when net taxable French real estate exceeds EUR1.3 million. Living in the US does not switch the tax off; it only limits the base to French property.
Does buying through an SCI avoid IFI?
Generally no. SCI shares are taxable for the fraction of value representing French real estate. The structure can help with succession and management, but it should be chosen with licensed counsel before purchase, not as a wealth tax workaround.
Does moving to France expose worldwide real estate immediately?
Qualifying new French tax residents who were nonresident for the previous five calendar years keep foreign real estate outside the IFI base through the end of the fifth year following arrival. From year six, worldwide real estate enters scope, so the year-six position should be modeled before the move.
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