IFI: Wealth Strategies to Optimize Your Real Estate Assets
The French Real Estate Wealth Tax (IFI) now applies exclusively to real estate holdings. For high-net-worth individuals, implementing an IFI wealth strategy can help reduce taxable assets while maintaining long-term capital value.
Property values are assessed as of January 1st each year, meaning actions taken now will directly impact your next year’s IFI assessment.
Sell or Reallocate Your Real Estate Assets
If your portfolio is heavily weighted toward real estate, consider reallocating part of your assets to IFI-exempt investments such as life insurance contracts, SCPI shares within assurance-vie, or diversified financial products.
However, a sound wealth strategy should not focus solely on tax minimization.
It is sometimes wiser to keep income-generating properties rather than face capital gains tax or lose steady rental income streams.
The maximum IFI rate is 1.5%, often lower than other capital taxation forms.
Opt for the Professional Furnished Rental (LMP) Status
Investors holding rental buildings can adopt the Loueur en Meublé Professionnel (LMP) status.
Under this structure, furnished properties are treated as professional assets and exempt from IFI.
Eligibility criteria:
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Annual rental income over €23,000,
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Representing more than 50% of total professional income.
A particularly effective approach for retired investors whose pensions do not count as professional income.
Anticipate Wealth Transfer
Early wealth transfer planning remains one of the most effective ways to reduce IFI exposure.
Each parent may gift up to €100,000 per child every 15 years tax-free.
By donating real estate instead of selling, you can erase latent capital gains while facilitating family succession.
However, bare ownership gifts (nue-propriété) do not remove the property from IFI taxable assets.
Temporary Usufruct Donation
Another option is to grant temporary usufruct of a rental property to a child.
During the usufruct period (3–10 years), the property is excluded from the donor’s taxable estate, and the beneficiary receives and declares the income.
Gift duties are capped at 23% of the property’s value per 10-year term and enjoy the €100,000 parent-child tax allowance.
This solution should be carefully implemented with notarial advice.
Vaneau Patrimoine & Investissements
Our wealth management experts guide you through customized IFI strategies that balance tax efficiency, family planning, and asset performance.
📞 +33 (0)1 48 00 89 33
✉️ contact@vaneau.fr