Understanding France’s Wealth Tax for Expats: Liability, Exemptions, and Planning

Friday, 10 October 2025

For many expats living in or investing in France, the French Impôt sur la Fortune Immobilière (IFI), or real estate wealth tax, can come as a surprise. Expats with worldwide or French-based real estate assets valued above €1.3 million may become liable.

Understanding how property is valued, what exemptions apply, and which strategies can minimise your exposure is essential, particularly for property investors and retirees.

In this guide, we'll break down everything you need to know about France's rreal estate wealth tax, how it applies to expats, and the best ways to plan ahead.

When Do Expats Become Liable for France's Wealth Tax?

Expats become liable for France's wealth tax (Impôt sur la Fortune Immobilière, IFI) when their taxable real estate assets exceed €1.3 million as of 1st January each tax year.

Residents: French tax residents must declare worldwide real estate assets above this threshold. Non-residents: Only French-situated property (directly or indirectly owned) is included.

This means that even if you're only retiring in France or holding a second home, you may be subject to IFI if your French property assets cross the €1.3m limit.

How Property Value Is Calculated

The taxable base for IFI is the net market value of real estate assets.

This includes:

Primary and secondary residences
Rental properties
Shares in property companies (e.g., SCIs)
Indirect holdings in real estate funds

Deductions allowed:

Mortgages and outstanding loans directly tied to the property
Certain ownership structures that reduce exposure

Important: Valuation is based on fair market value, which can differ from purchase price. Annual declarations must reflect updated market conditions.

Exemptions for Primary Residences

France offers a 30% deduction on the market value of a taxpayer's principal residence when calculating IFI.

Example:

Market value: €1.5m Deduction (30%): €450,000
Taxable value: €1.05m ? Below IFI threshold

This exemption is a valuable planning tool for retirees or expats who settle permanently in France. However, it does not apply to secondary or rental homes.

Strategies to Minimise Wealth Tax Exposure

Expats and investors often use legal tax planning to reduce IFI liability.

Common strategies include:

Optimise ownership structures: Holding property through certain company structures (e.g., real estate holding companies) may reduce exposure.

Use debt strategically: Deductible mortgages or loans secured against property lower the net taxable base.

Leverage exemptions: Maximise the principal residence deduction by ensuring correct declaration of your main home.

Gift or restructure assets: Transferring assets to heirs during your lifetime may help reduce exposure to IFI while planning succession.

Seek professional guidance: Cross-border tax planning is complex. Independent advice ensures compliance while minimising liability.

Key Takeaways for France Wealth Tax (IFI)

Expats become liable once real estate assets exceed €1.3m.
Residents must declare worldwide property; non-residents only French property.
Primary residences benefit from a 30% exemption.
Loans and debts may be deducted to reduce taxable value.
Smart structuring and professional tax planning can significantly lower exposure.

Frequently Asked Questions

Do retirees in France have to pay wealth tax?
Yes, if their worldwide (or French, for non-residents) real estate assets exceed €1.3m, retirees are subject to IFI. The primary residence exemption can, however, help many stay below the threshold.

Is rental property in France subject to wealth tax?
Yes, rental properties in France are fully taxable under IFI. Only a principal residence enjoys the 30% exemption.

Can I avoid French wealth tax if I own property through a company?
In some cases, yes. Ownership through certain structures (like property companies) may limit exposure, but anti-abuse rules apply. Always seek professional advice.

Elevate Your Tax Planning with France Tax Law

France's wealth tax rules can be complex, especially for expats with cross-border interests. At France Tax Law, we specialise in guiding property investors, retirees, and second-home owners through French tax regulations.

Our team can help you: Assess liability and exemptions Structure ownership effectively Minimise IFI exposure legally and efficiently.