TLDR: To use an IFI simulator, enter the net value of your taxable real estate assets and rights as of January 1, add the taxable real estate fraction of your holdings, apply the IFI scale, then check the cap when applicable.
1. Determine the net taxable value
Start by listing the taxable real estate assets and rights held on January 1 of the tax year. IFI applies to individuals whose net value of taxable real estate assets exceeds €1.3 million.
The taxable base, known as the assessment base, includes taxable real estate and, under the conditions provided, the fraction of shares or stock representing taxable real estate assets and rights.
The simulator must therefore distinguish taxable real estate assets from the other elements of your wealth. The value taken into account and whether the threshold is exceeded are assessed on the same date: January 1 of the tax year.
2. Calculate the real estate fraction of holdings
If you hold real estate through a company or organization, do not automatically report the total value of your shares or stock.
The taxable fraction may be determined by applying to the value of the shares or stock a coefficient corresponding to the ratio between:
- the actual market value of the taxable real estate assets and rights;
- the actual market value of all the assets of the company or organization.
The calculation is therefore: value of the shares or stock × taxable real estate fraction.
3. Apply the IFI scale
After determining the net taxable value, apply the IFI scale to this base. The simulator must separate these two steps: determining the assessment base, then calculating the tax corresponding to that base.
The amount obtained before the cap constitutes the IFI before the cap.
4. Check the cap
The cap may reduce the IFI of a taxpayer whose tax domicile is in France when the total of the IFI and the taxes taken into account exceeds 75% of net worldwide income determined according to the applicable rules.
For IFI for year N, the income and taxes taken into account correspond to those of the previous year. French and foreign income earned during that year is taken into account in accordance with the rules governing the cap.
The reduction corresponds to the difference between:
- the total of the IFI and the taxes taken into account;
- 75% of the income taken into account for the cap.
If this difference is positive, it reduces the IFI before the cap. In this calculation, tax credits corresponding to tax paid abroad and non-final withholding taxes are excluded in accordance with the applicable rules.