French wealth tax: Six ways to reduce what you have to pay

1. Give property away to family members 

A French resident can legally give €100,000 to each of their children without any gift tax being payable, and this is renewable every 15 years. 

The sum is €31,865 for grandparents to grandchildren. This can include real estate and investments. It can also be in addition to the ‘family gift’ of money of up to €31,865 every 15 years permitted from someone aged under 80 to each adult child or grandchild.

2. Make a temporary donation of usufruit

Reduce your declarable property wealth with a temporary donation of usufruit. 

That is, the use and benefit of a home or investment, eg. the right to receive rent or income – for example, to a young relative – for a set period via a notarised gift. 

This should be for at least three years. This takes the item out of your declarable possessions for IFI and completely out of the tax unless the person to whom you give it also has to declare. Be aware that the person must not be part of your foyer fiscal in this case.

3. Invest in nue-propriété

You may keep a property out of the IFI assessment by the purchase of the nue-propriété only, which is offered by certain property investment companies (acquisition en nue-propriété).

The usufruit – the legal right to use the property – is owned by, for example, a housing  association, which rents the property to a tenant. During the arrangement, which is  usually for at least 15 years, the property is not counted for IFI. 

4. Become a professional property letter 

If you have significant income from rental properties, you may want to look at the status of loueur en meublé professionnel (professional letter of furnished accommodation).

This is for people with rental income of at least €23,000/year and whose other ‘professional’ income is less than the income from letting. 

Because the property is seen as a ‘tool of your trade’, it is not part of your wealth for IFI.

5. Review your assurance vie contracts 

If some of your money placed in assurance vie is invested in property-related schemes, such as an SCI, SCPI or OPCI, or in stock-exchange listed property shares, you could arrange to take your money out of these and put it into something else that is not taxable to IFI.

6. Sell some property

Consider selling property investments, such as a buy-to-let property, and put the money into something else: for example, a suitable assurance vie policy, or perhaps invest in the stock exchange.

However, bear in mind that capital gains tax is likely to be payable unless you have owned the property for 22 full years, and social charges unless you have owned it for 30.