Tax Allowances Applicable to Real Estate Assets
In France, nearly 60% of households own their primary residence, and real estate accounts for around 80% of national wealth. Real estate remains a cornerstone of wealth strategies, particularly in high-end residential and luxury real estate markets.
What is real estate wealth?
An individual’s wealth consists of all assets and rights they legally own, which may be sold or transferred. Real estate is traditionally viewed as a safe investment, supported by the ability to use long-term mortgage financing, making property ownership accessible and scalable over time.
Taxation of real estate assets in France
Since 2018, the Real Estate Wealth Tax (IFI) applies to individuals whose net real estate assets exceed €1.3 million.
Only residential properties and indirect real estate holdings (such as shares in SCPI or OPCI vehicles) are included. Professional real estate and historical assets are excluded.
Additionally, the combined amount of IFI and income tax is capped at 75% of taxable income.
Key tax allowances on real estate assets
Several tax relief mechanisms help reduce the overall tax burden:
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30% IFI allowance on the primary residence (direct ownership only),
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Additional 20% allowance for properties held in joint ownership,
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75% allowance on certain agricultural land,
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Full capital gains tax exemption on the sale of the primary residence,
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Exemption for properties sold for €15,000 or less,
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Full capital gains exemption after 22 years of ownership (income tax).
Using debt to optimize real estate wealth
Mortgage debt remains a powerful tool for wealth optimization:
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Reduction of the IFI taxable base,
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Deduction of interest from rental income,
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Improved capital allocation,
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Enhanced estate planning through borrower insurance structures.