How to assess your assets at the finest to reduce the IFI

Many of the real estate wealth tax (IFI) declaration rules were modeled on those of its predecessor, the solidarity tax on wealth (ISF). However, these two taxes are not identical: “The IFI is not limited to a real estate wealth tax, since its taxable base also includes pieces of life insurance, the rules for deducting debts have changed and anti- optimization have been integrated “, analyzes Richard Chalier, technical director and partner at Fidroit.

Threshold, brackets and scale unchanged

To know if you are taxable at the IFI this year, you must start by evaluating your assets on the 1is January 2019 and deduct certain debts from it. Taxpayers who live as a couple, regardless of their marital status, must begin by aggregating the assets of each partner… and of their children. “If these are major in 1is January of the year of the declaration, their patrimony leaves their parents’ tax base, even if they continue to be attached to the fiscal household for income tax, ”explains Richard Chalier. If the total taxable amount exceeds 1.3 million euros, the tax household is taxed in installments. Please note, this tax then applies to assets from 800,000 euros, according to a progressive scale (see table below)

In this case, an IFI declaration must be completed, to be returned at the same time as the income declaration. “That is to say at the latest between May 21 and June 4 according to the department of the tele-declaring taxpayer, the deadline being May 16 for those who have chosen a paper declaration”, specifies Julien Riahi, lawyer co-founder of Arkwood law firm. The taxed household then receives a tax notice at the end of the summer, and must pay the amount of its 2019 IFI before September 15. Good to know: “If the amount exceeds 300 euros, it is mandatory to pay electronically. Otherwise, the taxpayer must pay an increase of 0.2% of the amount”, warns Sophie Borenstein, associate tax lawyer at the KGA firm

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A fairly large taxable heritage

The property taxable with this tax stamped “stone” corresponds to all real estate (buildings, apartments, land, houses, etc.) owned by the home. In France and abroad. Only goods held in the course of a professional activity (offices of his company, for example) are exempt. New this year: the declaration must indicate the value of the real estate assets as soon as they enter your assets. Added to this is the “paper stone”, that is to say the value of the real estate assets of SCPI and OPCI units held directly or via an investment (such as life insurance). As soon as one owns more than 10% of the capital or voting rights of a company that owns real estate, this stone heritage must be added to its taxable base.

Finally, a final subtlety concerns real estate held in dismemberment, that is to say whose ownership is separated between usufructuaries (who live in the property or receive the rents) and bare owners (who own the walls). “In the past, only the usufructuary was indebted to the ISF, this is no longer necessarily the case with the IFI,” explains Stéphanie Auféril, lawyer co-founder of the Arkwood law firm. Now, if it is a legal usufruct, granted by succession, the usufructuary and the bare owner must both declare the value of their assets according to the usufruct tax scale. For example, a 72-year-old usufructuary will declare 30% of the value of the property, the remaining 70% being to be declared by the bare owner. On the other hand, “in other cases, in particular donations in dismemberment or to the last living, the usufructuary remains liable to the IFI at 100%”, adds Stéphanie Auféril.

Discounts to remember

Good news: “The main residence still benefits from a reduction on its value of 30%”, notes Sophie Borenstein. This is also the case for land investments in woods and vines, which benefit from discounts, under long-term operating conditions. Another point to remember: certain rental properties with a protected tenant, or held jointly or via an SCI, may be subject to a discount, from 5 to 25% depending on the case. This is a tolerance of the tax administration. “If a good is easily transferable, the discount is lower than if it is difficult to sell,” explains Stéphanie Auféril.

Revisited deductions

With the ISF, all debts were deductible from assets. This is no longer the case with the IFI. “Only those relating to assets taxable to the IFI can be taken into account. And again, under conditions, ”recalls Sophie Borenstein. Thus, it is possible to deduct from the assets the amount of loans that were used to finance the acquisition of real estate or the work. But if this property is partially taxed, the liability is only deductible up to the taxable portion. The only exception is “the debt relating to the principal residence. It is taken into account in full, without a 30% reduction, but within the limit of the value of the main residence after the reduction, ”confirms Richard Chalier.

It is also possible to deduct the amount of the property tax (but not that of the housing tax), the tax on vacant housing and unpaid inheritance tax on the property.

Since last year, the loans in fine, for which the borrower repays the capital in one go at maturity, must be amortized “fictitiously” each year, as if the borrower had repaid part of the loan! Thus, a loan in fine of 100,000 euros concluded over 10 years will be deductible up to 90,000 euros the second year, 80,000 euros the third … Since 1is January, all final credits are affected, even those taken out through a company.

Finally, “it is impossible, with some exceptions, to deduct a liability if the loan was contracted within a tax household, a family group or a company controlled by a family”, states Jean-François Desbuquois, lawyer, member of the Cercle des fiscalistes.

Last subtlety: taxpayers who declare taxable assets of more than 5 million euros can no longer deduct all of their credits. “The fraction of debt which exceeds 60% of the value of their assets is only allowed in deduction up to 50%”, underlines Julien Riahi.

A year 2020 to prepare now

To reduce the amount of its IFI this year, it is impossible to benefit from the tax reduction linked to the subscription to the capital of SMEs, through FIPs and FCPIs: it has been abolished. There is therefore only one solution: to be generous, by giving to certain organizations of general interest: foundations recognized as being of public utility, hospitals and universities, public or private research, higher or artistic establishments. non-profit, National Research Agency, companies, workshops and integration projects. In this case, it will be possible to reduce the amount of his IFI to 75% of his donations, up to a limit of 50,000 euros. This therefore corresponds to a maximum donation of 66,667 euros.

And to reduce its IFI for next year, we must put in place strategies today, because it is a question of reducing its taxable base by January 2020. Among the most effective measures: renting your homes vacant to take advantage of occupancy discounts, or to carry out work on credit to maintain its real estate assets. You can also choose to give the temporary usufruct of a rental apartment to a relative (child, parent, etc.) who needs additional income to finance studies or complete a small pension: because it will be up to him to declare this property to the IFI during this period of dismemberment. Beware of abuse of rights, however. “The tax administration is very careful about these operations, which must not be carried out for purely fiscal reasons”, recalls Sophie Borenstein.

Marie Pellefigue