IFI: CERTAIN RELEVANT REAL PROPERTY
1.3 million euros is the threshold beyond which property owners are liable for the new Property Tax (IFI). This tax has thus come to replace in 2018 the Solidarity Tax on Fortune (ISF). If you have, on January 1st of the tax year, a wealth in the stone higher than this amount, you are therefore one of the big losers of the reform. However, you can take advantage of certain exemptions because only properties that are not professional assets are taxable.
Off-field professional activities
The real estate assigned to the exercise of the professional activity is exempt from IFI. More specifically, the property necessary for a professional activity and belonging to one of the members of the tax household (professional himself, his spouse or his children if they are attached) escape the IFI. On the other hand, they must have a direct link with the farm and be used effectively and exclusively for the needs of an activity. This can be industrial, commercial, liberal or even artisanal or agricultural. This activity must be exercised by the owner of the property (or his spouse, partner of Pacs or cohabiting partner) in the main, that is to say, in a usual way, constant and for profit. The activity must represent more than half of the professional income.
To be a professional renter
Real estate assigned to a furnished rental activity is also exempt. Again, it's about being considered a professional renter. To benefit from the exemption regime in the IFI, it must be at the head of a significant rental property, generating annual revenues over € 23,000. In addition, rents from the rental of the furnished property must represent more than 50% of the professional income of the tax home.
Tax optimization strategy
A real estate owner subject to the IFI may have an interest in leaving the usufruct of some of his property while keeping the bare ownership. Typically by making a temporary donation of the usufruct to his children. This effective arrangement consists in giving up for free for a few years a rented property, thus productive of income, to his relatives. This dismembered property then becomes 100% taxable in the name of the usufructuary throughout the duration of the dismemberment since it thus leaves the taxable patrimony of the bare owner. If the usufructuary is not itself subject to the IFI, the property escapes it completely.
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