Focus on the IFI: Direct or indirect ownership?

The real estate wealth tax can affect both residents and non-residents:

  • People domiciled in France for tax purposes must declare their assets located in France and abroad if the net value of your real estate assets exceeds 1.3 million euros.
  • New impatriates benefit from a tax exemption on their real estate abroad until the end of the 5th year following their move to France.
  • Non-residents are only liable for wealth tax on real estate located in France that exceeds the threshold.

However, a “resident” or “non-resident” taxpayer may hold assets in two different ways: directly or indirectly, which means that the basis of taxable assets is determined differently.


The taxpayer holds the real estate assets in his own name, rather than through a legal entity such as an SCI. In the case of principal residences, the 30% allowance on market value applies only to direct ownership.

The IFI calculated in this way relates to the net value of your real estate assets on January 1 of the year, i.e. after deduction of debts existing on January 1 of the year, provided you can justify them. Various debts can reduce the IFI tax base in the case of direct ownership, such as :

  • Bank loans to purchase or carry out construction work on a property. However, some loans are subject to special deductions, notably bullet loans.
  • Des dettes inhérentes au patrimoine immobilier tels que :  
    • Debts relating to repairs, maintenance or reconstruction ;
    • Taxes on real estate alone: property tax, tax on vacant dwellings, IFI

Some properties are even fully or partially exempt from the IFI :

  • Professional assets ;
  • Forestry group shares… ;


Indirect ownership means that the taxpayer holds real estate through company shares. These company shares are only liable to the IFI for the portion of their net value representing real estate assets or rights.

In this sense, the taxable fraction is calculated in several stages:

  • Carry out a valuation of the company’s shares;
  • Calculate the company’s property ratio (market value of taxable buildings or property rights held by the company / market value of all its assets);
  • Apply a specific allowance for illiquidity.

However, you need to be careful about whether or not to deduct certain debts, such as shareholders’ current accounts.

Lastly, in the 2 cases of holdings, there are certain deduction ceilings, notably when the market value of the assets exceeds 5 million euros and the amount of the debt exceeds 60% of this value.

Do you have any questions? Our tax team is here to guide you. Contact us!

Circular written by Maud MESTRE – Tax Manager at RUFF & ASSOCIÉS

Need help?

It is important to note that this article may be subject to change depending on government news and directives.
So if you have any questions, our Ruff & Associés teams are always at your disposal. Let us help you with your projects – contact us!

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