French Real Estate Wealth Tax (IFI): What U.S. Citizens Need to Know in 2025

French Real Estate Wealth Tax (IFI): What U.S. Citizens Need to Know in 2025

France’s Real Estate Wealth Tax, known as the Impôt sur la Fortune Immobilière (IFI), affects anyone with French-based real estate valued above €1.3 million (net of debt) — including U.S. citizens, even if they live outside France.
This guide offers an overview of how IFI works, what assets it includes, and what tax strategies are available for American property owners in France.

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What Is the IFI and Who Is Affected?

The IFI is a French annual tax on real estate wealth, introduced in 2018 to replace the former ISF (Solidarity Wealth Tax).
It applies to natural persons, not corporations, and is calculated based on the net value of real estate assets as of January 1st each year.

• French tax residents are taxed on real estate worldwide.
• Non-residents, including U.S. citizens, are taxed only on real estate located in France.

You become liable for IFI if your net real estate assets in France exceed €1.3 million.

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Are U.S. Citizens Liable for IFI?

Yes — U.S. citizens who are not tax residents in France are still liable for IFI on French-based property, if the value exceeds the threshold.

The U.S.–France tax treaty does not prevent the application of IFI.
As a wealth tax and not an income or estate tax, IFI is governed by French domestic law, with no credit or exemption provided under the treaty.

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What Types of Assets Are Included?

IFI covers:

• Directly held French real estate: houses, apartments, land, rental properties
• Shares in real estate companies: SCIs (Sociétés Civiles Immobilières), and foreign companies primarily holding French real estate
• Rights in property: usufruct, joint ownership, bare ownership

Special consideration:

• Trusts may be taxable depending on their structure. French law often "looks through" trusts to the settlor or beneficiary when assets are French-based.
• Foreign entities (LLCs, LPs, etc.) may not shield you from IFI if they function as pass-throughs.

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Legal Strategies to Minimize IFI Exposure

Several legal planning strategies can help U.S. citizens reduce IFI exposure, including:

• Holding real estate via an SCI, which may offer certain tax management advantages (though not exemption)
• Valuation discounts (e.g., for co-ownership, occupancy, rental agreements)
• Property dismemberment (usufruct / nue-propriété separation)
• Deducting mortgage loans or renovation-related debts, if documented properly

Each structure must be validated by a French tax professional to comply with anti-abuse rules.

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How U.S. Citizens Declare IFI

You are required to file a French tax return including Form 2042-IFI, which reports your taxable real estate.
This is typically done between April and June, depending on your situation.

How to declare:

• Online via the impots.gouv.fr portal for non-residents
• Or by paper if online access isn’t available

How to pay:

• By international bank transfer
• Or secure online payment (card or account)

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Common Questions from U.S. Investors

Are my trusts or LLCs in the U.S. exempt from IFI?
→ Not necessarily. If the French tax authority views the entity as transparent, you may still be personally liable.

Does IFI apply to rental properties?
→ Yes. The IFI is based on property value, not rental income. However, debts (e.g. loans) related to the property can be deducted.

Can I deduct IFI on my U.S. taxes?
→ In most cases, IFI is not creditable under U.S. tax rules, as it is a wealth tax, not an income tax. Check with your U.S. tax advisor.

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Expert Guidance for U.S. Nationals with Property in France

To avoid penalties and optimize your situation:

• Work with a French tax attorney familiar with U.S. structures
• Coordinate between your French and U.S. advisors
• Regularly update property valuations
• Monitor both French legal changes and U.S. tax reporting requirements

Cross-border taxation is complex, but with the right guidance, you can navigate the IFI confidently while preserving your long-term real estate 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.