Definition, conditions relating to the taxpayer, tax baseCalculating and deducting donations from taxes: this article provides all the information you need to understand and optimize your tax benefits. Real Estate Wealth Tax (IFI).
What is the IFI?
The Real Estate Wealth Tax (IFI), in place since 2018, replaces theWealth Solidarity Tax (ISF). This tax concerns the real estate and is due by all tax household in possession of real estate whose net taxable value exceeds 1,3 million euros on January 1 of the tax year.
Taxpayers subject to the IFI (French wealth tax) may be:
- Residents of France and owning real estate assets in France or abroad.
- Residents living abroad and owning real estate in France.
La IFI declaration takes place every year, at the same time as the declaration of revenus, on the form 2042-IFIThis declaration can be made online or on paper if the person does not have internet access.
IFI and ISF: what's the difference?
Overall, the Real Estate Wealth Tax (IFI) works similarly to theISFThe major difference between these two taxes is their tax base: while the ISF (wealth tax) applied to all movable and immovable assets, the IFI (real estate wealth tax) focuses exclusively on real estate assets. a principal residence is always subject to a 30% discount.
IFI tax base
The tax base for the Real Estate Wealth Tax covers all real estate assets not used for professional activity. This includes built and unbuilt properties, properties under construction, and properties or portions of properties held through shares in real estate companies (SCI). real estate rights and buildings classified as historical monuments are all properties which are taken into account in the calculation of the amount of the IFI and must therefore be declared on form 2042-IFI.
Discount system
Real estate assets with a value between 1,3 and 1,4 million euros are subject to a discount, the amount of which is calculated as follows: €17,500 – 1,25% of the net taxable value of the real estate assets.
IFI, donations to associations or foundations and tax reduction
Donations made to organizations of general interest, associations or foundations recognized as being of public benefit, such as the Pasteur Institute of Lille, entitle the donor to a tax credit. reduction of the Real Estate Wealth Tax for the person indebted. Depending on the amount of the donation, it is even possible for the donor to exonerate in full of the IFI.
Donations to a non-profit organization are deductible from the French wealth tax (IFI) at a rate of 75% of the donation amount, up to a limit of €50,000. (Add a sentence: if this limit is exceeded, the donation can be deducted from income tax (IR) to avoid limiting the donation amount.)
Donations deductible from wealth tax: examples of tax reduction calculations
The amount of the Real Estate Wealth Tax (IFI) is calculated by adding the amounts between each bracket, multiplied by the applicable rate to each slice.
The amount of the Real Estate Wealth Tax (IFI) is calculated by adding the sums between each bracket, multiplied by the rate applicable to each bracket.
For example, for real estate assets worth 2 000 000 € :
- Portion of assets between €800,000 and €1,300,000: €500,000 x 0,5% = €2,500
- Portion of assets between €1,400,000 and €2,570,000: €600,000 x 0,7% = €700
- Portion of assets between €1,400,000 and €2,570,000: €600,000 x 0,7% = €4200
- Your IFI amount is 2500 + 700 + 4200 = €7400
- Maximum amount of donation deductible from IFI to reduce IFI to 0: 7044/0,75 = € 9
- Tax deduction for IFI purposes: Donation amount x 0.75 = € 7
- Amount remaining to be paid for IFI: 7,400 – 7,400 = €0
- Actual cost of the donation after deduction: € 2
Similarly, if the donor decides to make a donation of €100, after deduction, they will only receive €25.
Reduce your wealth tax by donating to the Pasteur Institute of Lille
The generosity of our donors is essential to the continuation of the mission of the Pasteur Institute of Lille. Donations represent 75% of the foundation's resources and are used entirely and directly for scientific research, as well as for prevention and public awareness campaigns in the fight against disease.
By donating to the Pasteur Institute of Lille, you reduce the amount of your Real Estate Wealth Tax, while also helping to advance research on longevity to better understand and treat age-related diseases.
