IFI and Your Real Estate Assets: Should You Restructure?

IFI Real Estate Assets: What Actually Changed

The IFI is assessed exclusively on real estate assets, whether held directly or via entities. In contrast, financial assets (e.g., shares), once taxed under the ISF, are excluded from the IFI.

This major shift prompts a common question: should you reduce exposure to property and increase non-taxable assets? The answer depends on your time horizon, liquidity needs, and estate planning.

Fewer Taxpayers Affected Compared to the ISF

Key point: thresholds and brackets mirror the former ISF.

• The IFI applies to individuals with real estate assets over €1.3m on January 1 of the tax year.

• The progressive scale is unchanged.

Result: unless highly concentrated in property, a household previously taxed under the ISF may no longer be taxed (or less) under the IFI. Initial projections for 2018 indicated ~150,000 taxpayers under the IFI vs ~350,000 under the ISF in 2017.

Don’t Rush Your Decisions

The IFI is based on your balance sheet as of January 1. Actions taken this year will affect next year’s IFI. Consider:

• Main residence: 30% allowance off fair market value.

• Debt deductibility: mortgage liabilities reduce the taxable IFI base.

• Usufruct/bare ownership: in certain cases, each party is taxed on their respective rights.

Note: The top IFI rate is 1.5%. If selling property would trig