With over €297 million worth of loans arranged by international mortgage broker, Enness, in 2017, France is becoming one of the most popular locations for second property investment.
Those who make investments in France could save thousands in tax as a result of the new wealth tax, Impôt sur la fortune immoblière (IFI), according to Hugh Wade-Jones, managing director of Enness International.
Announced by President Macron, the new wealth tax – an upgrade to the existing Impôt de solidarité sur la fortune (ISF) – will see investors taxed purely based on their real estate assets, rather than all financial assets. This means all other wealth (such as securities, bank and financial investments) is exempt from the tax.
The IFI has been in effect since January 1 2018 and is calculated as follows: a 0.5% tax on real estate assets worth €1.3 million or more will be applied to the net value of property above €800,000. The tax is only applicable to the amount of equity an investor has in the property.
This means if an investor owns a €1.3 million property and has €900,000 equity in it, they will pay 0.5% tax on the €100,000 above €800,000.
“IFI is fantastic news for investors of French property,” Wade-Jones commented.