French Real Estate Wealth Tax (IFI): What Hong Kong Investors Should Know in 2025

French Real Estate Wealth Tax (IFI): What Hong Kong Investors Should Know in 2025

France’s Real Estate Wealth Tax (Impôt sur la Fortune Immobilière, or IFI) applies to any individual who owns French real estate with a net value exceeding €1.3 million. This includes non-residents, such as investors based in Hong Kong. Whether you own a pied-à-terre in Paris or a portfolio of rental properties across the Riviera, it’s essential to understand how the IFI applies to you — and how you can reduce your exposure legally.

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Understanding IFI – Who Is Affected?

The IFI was introduced in 2018 to replace France’s former wealth tax (ISF). Unlike ISF, the IFI applies only to real estate assets, not to financial portfolios, shares, or other movable wealth.

There are two categories:

• French residents are taxed on their global real estate holdings
• Non-residents, including Hong Kong residents, are taxed only on French real estate assets

The tax applies if your net taxable property value in France exceeds €1.3 million as of January 1 each year.

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Are Hong Kong Residents Liable for IFI?

Yes. If you are based in Hong Kong and own real estate in France above the €1.3 million threshold, you are subject to IFI.

There is no specific tax treaty between France and Hong Kong that overrides or excludes the IFI. Therefore, the French domestic tax rules apply in full. This includes Hong Kong citizens, permanent residents, and even company structures registered in Hong Kong that are considered transparent or property-focused.

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What Real Estate Is Included in IFI?

The IFI covers a broad range of French-based assets:

• Direct ownership of property: homes, apartments, villas, land
• Rental properties, even if unoccupied
• Shares in companies (French or foreign) that are primarily real estate holders, such as French SCIs
• Rights in property, such as usufruct, bare ownership (nue-propriété), or joint ownership

Excluded from IFI:

• Properties used exclusively for professional purposes
• Certain debts related to property acquisition or improvement
• Assets held via properly structured foreign companies, depending on substance and transparency

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How to Reduce IFI Exposure Legally

Many high-net-worth individuals from Hong Kong use legal and financial tools to reduce or optimize IFI exposure. Examples include:

• Holding property through Société Civile Immobilière (SCI), if structured properly
• Using property dismemberment (splitting usufruct and ownership) to lower value
• Applying valuation discounts for shared ownership, leased properties, or occupied residences
• Deducting outstanding mortgage debt, certain taxes, or renovation loans

Every structure must be reviewed carefully with a cross-border tax specialist, especially when using foreign entities or trusts.

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How to File IFI from Hong Kong

As a non-resident, you must declare the IFI using Form 2042-IFI, typically filed at the same time as the French income tax return (even if you earn no income in France).

How to file:

• Online via France’s non-resident tax portal: impots.gouv.fr
• Alternatively, via paper mail to the Non-Resident Tax Office

Payments can be made by:

• International bank transfer
• Online card payment through the French tax portal

Filing deadlines usually fall between April and June.

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FAQs from Hong Kong Investors

I own a French apartment through a Hong Kong or BVI company. Am I exempt?
→ Not automatically. If the entity’s sole or main purpose is to hold French property, it may be “looked through” by French tax authorities.

My property is rented. Am I still subject to IFI?
→ Yes. Rental income is separate from IFI. The IFI is based on asset value, not income.

Is IFI the same as income tax?
→ No. IFI is a wealth tax based on the value of your property, not your revenue. You may owe both if you rent out your property.

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Professional Guidance for Hong Kong Property Owners

If you are a Hong Kong resident with French real estate assets, you should:

• Engage a French international tax advisor for structuring advice
• Update property valuations annually to avoid overpaying
• Ensure compliance to avoid interest, penalties, or audits
• Track changes in French tax policy, especially regarding foreign-owned property structures

Proactive planning ensures tax efficiency, asset protection, and peace of mind — especially if your French portfolio is part of a broader international investment strategy.

 

Mabrouk Sassi

International Tax & Business Lawyer – Paris

 

Looking to invest in luxury real estate in France? I offer high-level legal and tax support to help you secure the right property with complete peace of mind — from due diligence to ownership structuring and all related tax implications.

 

I am not a real estate agent. As an independent lawyer, I work exclusively in your best interest, with no ties to brokers or developers.

 

With over 30 years of experience advising high-net-worth individuals and international clients, I also assist with complex tax matters, including aggressive tax audits, tax fraud investigations, and anti-money laundering compliance.

 

The extensive history of implementing tax and legal law sector has contributed to the development of a strong reputation, as demonstrated by the frequent appearances of Mr. SASSI, a legal professional, in many respected media outlets such as L’Express, Les Échos, L’Expansion, L'Entreprise, and BFM Radio, among others.

 

Our clients comprises both domestic entities, comprising firms and persons as well as international entities, including companies and individuals situated in regions such as Asia, the Middle East, Maghreb, and Africa.

 

Please feel free to reach out to us for any inquiries or requests for assistance.

 

Contact:

 

Mabrouk SASSI, lawyer Paris Bar

32 avenue Carnot – Paris 17th - France

infos@sassi-avocats.com

Tel 07.71.58.58.58

 

The following links may be of assistance:

 

• The General Tax Code (CGI) refers to the comprehensive set of regulations and laws that govern the taxation system within a certain jurisdiction. It encompasses the many provisions and guidelines that dictate the assessment

 

• The provided link directs to the official website of Legifrance, which is the French government

 

• The subject of discussion pertains to the doctrine of tax administration within the Ministry of Budget.

 

• The provided URL leads to the official website of the French tax administration.

 

• The provided link directs to the official website of the French tax administration, specifically to the section

 

• The Ministry of Economy and Finance is a governmental institution responsible for overseeing and managing economic and financial matters within a certain jurisdiction.