France taxes your villa for existing: the IFI wealth tax, explained for a foreign owner

Rental income tax, property tax and capital gains tax all have an obvious trigger: you earned something, you owned something, you sold something. France has a fourth tax with no trigger at all. The IFI is charged on what your French property is worth on one single day of the year, whether it earned a euro or stood empty, and a foreign owner is caught by it on their French property alone. Here is the structure, with every figure dated and sourced.

What the IFI is, and the one date that decides everything

The "impot sur la fortune immobiliere", French for real-estate wealth tax, replaced France's old general wealth tax in 2018 and narrowed it to one asset class: real estate. Shares, bonds, cash and business assets are outside it entirely. What matters for a foreign owner is stated plainly by the French tax authority itself: if you are not tax resident in France, you are liable only on your properties and property rights located in France, plus the property-representative fraction of shares in companies that hold French real estate. Your house in Connecticut, your London flat and your portfolio are irrelevant to the French calculation. The test is a snapshot, not an average: what your net French real estate is worth on 1 January of the year. Cross the threshold that morning and you file for that year, even if you sell in February. Sit below it that morning and you do not file at all, even if you buy a second villa in March. There is also a shelter worth knowing if you ever move: someone who transfers their tax residence to France after five calendar years domiciled elsewhere is taxed on French property only, and that treatment runs to the fifth year following the move, after which worldwide property comes into the base.

The threshold, and the band that bites below it

The threshold is 1,300,000 euros of net taxable property, measured on 1 January. Below it you owe nothing and file nothing. The detail that surprises almost every first-time filer: once you are over the threshold, the tax is not computed from 1,300,000 euros. It is computed from a band table whose first taxed band starts at 800,001 euros. Crossing the line drags 500,000 euros of value that sat below the threshold into a 0.5% band with you. The bands published for 2026 are: nothing up to 800,000 euros; 0.5% from 800,001 to 1,300,000; 0.7% from 1,300,001 to 2,570,000; 1% from 2,570,001 to 5,000,000; 1.25% from 5,000,001 to 10,000,000; and 1.5% above 10,000,000. A relief, the "decote", softens the cliff for values between 1,300,000 and 1,400,000 euros: the published formula is 17,500 euros minus 1.25% of the net taxable value, subtracted from the tax due. French practitioner sources reported in 2026 that the finance law for 2026 did not change the IFI threshold, bands or decote. Band tables are republished each spring with the filing campaign, so confirm the table in force for your own filing year rather than trusting this one indefinitely.

Two worked examples, so the arithmetic is not a mystery

Illustrations of the calculation only, not claims about any real property. First, a villa just over the line: net taxable French real estate of 1,350,000 euros on 1 January. The 0.5% band takes 500,000 euros, so 2,500 euros. The 0.7% band takes the remaining 50,000 euros, so 350 euros. Gross tax 2,850 euros. The decote gives 17,500 minus 1.25% of 1,350,000, that is 17,500 minus 16,875, or 625 euros of relief. Net IFI about 2,225 euros. Second, a property of the size this site actually talks about: net taxable French real estate of 4,000,000 euros. The 0.5% band on 500,000 euros gives 2,500. The 0.7% band on 1,270,000 euros gives 8,890. The 1% band on the remaining 1,430,000 euros gives 14,300. Total about 25,690 euros, every year, owed whether or not a single night was sold. That is the number to put next to your running costs before you look at any income at all: see what the same villa could plausibly earn with our free estimate in three questions, and note that the IFI is charged on the capital value, so a bad rental year does not reduce it by one euro.

What a mortgage does to the bill, and the traps in the debt rules

IFI is charged on a NET figure, so debts count, and this is why a French mortgage is a legitimate planning instrument rather than merely a way to fund a purchase. But the deduction is fenced. The tax authority states that deductible debts are limited to those associated with the taxable assets, or admitted in proportion to the taxable fraction of their value: a loan secured on your French villa reduces the French base, a loan against an asset outside the IFI does not. Three specific rules in the tax code and its official commentary catch structures built to exploit that. An "in fine" loan, where capital is repaid in a single lump at the end, is not deductible at its face value; it is deducted after a notional straight-line amortisation over the loan term, so on the official worked example a 300,000 euro in fine loan taken three years ago is deductible at 285,000 euros, being 300,000 minus three times 300,000 divided by twenty. A loan with no repayment term set at all is written down by a notional 5% a year. A loan from a member of your own family circle, directly or indirectly, is in principle not deductible at all, though the law leaves a safeguard where you can prove the loan is on normal commercial terms. And for the size of property this site covers, one more: where taxable property exceeds 5,000,000 euros in value and total debt exceeds 60% of that value, the debt above the 60% mark is admitted only at 50% of the excess. Highly leveraged large holdings therefore do not shrink the base as far as the arithmetic first suggests.

The two reliefs a French resident gets and you do not

This is where the foreign owner is structurally worse off, and neither point is obvious from a general guide to the IFI. First, the 30% allowance on the main residence. France knocks 30% off the market value of the home its owner occupies as their "residence principale" on 1 January. Your French villa is by definition a second home, so you value it at 100% while a French resident down the road values a comparable property at 70%. Second, and larger, the 75% cap. Under the cap in the French tax code, a resident whose combined income tax and IFI exceed 75% of their worldwide income has the excess struck off their IFI, which is the mechanism that stops a wealth tax from exceeding what the taxpayer actually earns. That cap is reserved for taxpayers domiciled in France. A non-resident taxed on French real estate alone cannot in principle invoke it, whatever their total tax burden, with a narrow exception for the so-called Schumacker non-residents who derive substantially all their income from France. So an owner with a valuable French villa and modest income has no ceiling: the IFI is charged on the stone, not on the earnings. This is the single most important asymmetry in the whole tax, and it is worth pricing in before you buy rather than discovering it in your first filing year.

The American question, and the honest answer

The United States has no federal wealth tax, so there is no equivalent bill for the IFI to sit against. On the allocation of taxing rights the position is settled and unhelpful: essentially every double tax treaty, including the one between France and the United States, allocates the taxation of immovable property to the country where the property sits, so France keeps its right to charge the IFI on a French villa. What is genuinely unresolved is whether you can credit it. IRS guidance is that the Foreign Tax Credit is available for income, war profits and excess profits taxes, which on its face excludes a tax on the value of an asset, and general IRS material states that wealth and property taxes do not qualify. Several expat tax-advisory firms nonetheless publish the opposite position, that IFI can be claimed on Form 1116. We could not resolve that conflict against a primary IRS ruling on the IFI specifically, so we are not going to tell you which is right: take the question to your own preparer, in writing, before you file. What is not in doubt is the filing mechanics on the French side. IFI is declared on form 2042-IFI, filed with or alongside the income return on the same calendar, and a non-resident living outside the EEA may be asked by the French authorities to appoint a representative in France to receive correspondence on assessment and collection. This is a different requirement from the mandatory tax representative on a sale above 150,000 euros, covered in the capital gains article. For the annual taxes you pay alongside this one, see the French property taxes a foreign owner actually pays, and if a fixed annual charge on capital value changes your thinking entirely, compare the Riviera with a market that has no wealth tax at all.

The honest disclaimer

This is general information, not tax or legal advice, and we are not tax or legal advisers. Whether you owe IFI at all, on what value, and after which deductions depends on your residence, your nationality, how the property is held, the debts against it and the law in force on 1 January of the year concerned, and French finance laws revisit these rules most years. Confirm every figure with a notaire or a qualified cross-border tax professional before relying on any of it. Where a point could not be resolved, namely whether IFI is creditable against US tax, we said so rather than pick the convenient answer. Sources, verified 04/08/2026: non-resident liability limited to French property and property rights, the 1,300,000 euro net threshold measured on 1 January, the restriction of deductible debts to those associated with taxable assets, the five-year treatment on transferring tax residence to France, the 2042-IFI filing route and the possible requirement for a non-EEA resident to appoint a representative in France for correspondence (impots.gouv.fr, "Property wealth tax (IFI) for non-residents who own property in France and/or abroad"); the special debt rules, in fine loan notional amortisation with the 300,000 euro official example, the 5% a year write-down for loans with no term, the exclusion of family loans subject to a normal-terms safeguard, and the 5,000,000 euro / 60% debt-ratio restriction (BOFiP, BOI-PAT-IFI-20-40-20 and BOI-PAT-IFI-20-40-30, and CGI article 974); the 30% main-residence allowance (CGI article 973); the 75% cap and its restriction to taxpayers domiciled in France, with the Schumacker exception (CGI article 979 and BOFiP BOI-PAT-IFI-40-30); the 2026 band table, the 800,000 euro entry point, the 17,500 minus 1.25% decote formula and the statement that the 2026 finance law left the IFI regime unchanged (French tax-practice publications, 2026, which republish the DGFiP campaign table); US Foreign Tax Credit eligibility limited to income, war profits and excess profits taxes (IRS, "Foreign taxes that qualify for the Foreign Tax Credit"). The conflicting advisory-firm claims that IFI is creditable on Form 1116 were found in 2026 expat-tax publications and are reported above as unresolved, not endorsed.

Published 04/08/2026. Figures generated from our live benchmark data and updated on recalibration.