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isf ifi

FROM ISF TO IFI: WHAT SHOULD CHANGE

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For Emmanuel Macron, the ISF hampers the development of our economy. Flagship measure of its tax program, its transformation into Real Estate Tax (IFI) will be effective January 1, 2018. While the broad outlines of the reform are known, homeowners have difficulty in measuring the impact it will have on the taxation of their wealth. They will be fixed next December only, when the final vote of the finance law for 2018.

Introduction

Tax exempt financial assets

The reform aims to concentrate the taxation of wealth on real estate assets and to exclude capital. All financial assets should therefore benefit from an exemption, be it money held in a bank account, savings placed on a book or life insurance, or securities (shares, shares, bonds, Sicav and FCP ...).

According to Bercy, taxpayers subject to the TFR will see their tax burden divided by an average of two. The tax savings should, however, be greater for the large fortunes, composed mainly of financial assets, than for the small ones whose patrimony consists mainly of real estate.

Calculation rules maintained

The current ISF calculation rules should be retained. You will therefore pay the IFI next year if the net value of your real estate holdings on 1 January 2018 exceeds 1.3 million euros. Its amount will be calculated from the same progressive scale as that applicable this year.

The valuation rules for your assets should also remain unchanged. You can still apply a 30% discount on the value of your principal residence. Your property used in the course of your professional activity will remain exempt from IFI as a professional asset, your rented furnished accommodation also if you have the status of professional renter.

Description

The valuation rules for your assets should also remain unchanged. You can still apply a 30% discount on the value of your principal residence. Your property used in the course of your professional activity will remain exempt from IFI as a professional asset, your rented furnished accommodation also if you have the status of professional renter.

What impact for real estate investors?

In principle, the owners will be subject to the new tax on all their real estate held in a private capacity, whatever the nature and use. As today, lessors will be able to apply a discount on their leased property, which varies according to the type of lease and its duration.

The Minister of Action and Public Accounts, Gerald Darmanin, however, said that buildings that participate in productive life and the economy will be out of the IFI. Professional property (offices, shops ...) rented could therefore benefit from a new exemption.

For rented dwellings, however, the blur remains intact. Essential for the construction sector and the private rental market, private investors are likely to turn away from residential real estate if it is subject to the IFI ... The uncertainty also remains for shares of Civil Societies Real Estate Investment (SCPI): will those invested in commercial real estate be exempt? The "tax" SCPIs invested in residential real estate? to be continued.
 

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