THE ISF GIVES WAY TO THE IFIAs you most certainly know, the wealth tax (ISF) gives way, as of 2018, to the property wealth tax (IFI). But what exactly is changing? Explanations ...
So far: ISF
€ 1.3 million. If the value of your taxable net wealth exceeds € 1.3 million, you have to pay the wealth tax (ISF).
Taxable property. This tax affected all property of the person liable for tax: immovable property (main residence, after deduction of a 30% allowance, second homes, rental residences, etc.), movable property, bank assets, etc. All of these taxable goods were assessed according to their market value on January 1 of the tax year, the market value corresponding to the price that can be obtained by the game of supply and demand in a real market. .
Exempt property? Goods were exempt from ISF. These include woods and forests, non-redeemable life insurance contracts (with exceptions), works of art, antiques and collectibles and goods qualified as professionals.
Deductible debts. The debts remaining at your expense, existing on January 1 of the tax year, were taken into account for the calculation of the ISF; including income tax, social security contributions, housing and property taxes, the principal owed on loans taken out for the purchase of taxed property and the wealth tax itself.
Change ? In reality, what changes from 01.01.2018 is the basis for calculating the tax. Everything concerning the liability threshold (€ 1.3 million), the scale, the persons liable and the chargeable event (January 1 of the tax year) does not change.
Taxable property. Real estate wealth tax (IFI) is now only concerned with property and property rights, understood in the broad sense: house, apartment, main residence (with maintenance of the abatement of 30%), secondary, etc. property encumbered with a right of usufruct, housing or use, leasing contracts, etc. Similarly, securities of companies owned by the person liable for tax are taxable up to the fraction of their representative value of real estate owned directly or indirectly by the company. This taxable fraction, however, does not take into account, on the one hand, professional real estate for companies and, on the other hand, real estate included in investments of less than 10% in operational companies.
Exempt property? The exemptions up to now applicable in terms of wealth tax in favor of professional goods, wood and forests, shares of forest or land groupings are, moreover, transposed within the framework of the IFI.
Deductible debts. To be deductible, debts must, as so far, be linked to taxable property and rights, exist on January 1 of the tax year and be effectively at your expense: these are debts linked to purchases property and taxable property rights, repair and maintenance expenses (actually borne by the owner in the case of rental), improvement, construction, reconstruction or enlargement works and taxes due on the grounds of the properties real estate.
To note. When the market value of taxable assets is greater than € 5 million and the amount of debts exceeds 60% of this value, the fraction of debts exceeding this limit is only deductible up to 50% of this excess (unless you prove that the debts were not contracted for a primarily fiscal purpose).
Only property and property rights, understood in the broad sense, are no longer affected by the wealth tax. Note that the 30% allowance on the main residence is maintained, as are the exemptions that affect the professional property of companies.
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