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Of the ISF to the IFIS : what we know of the new tax on the real estate asset

The main lines of the reform were unveiled, but some unknowns still remain, including the treatment that will be reserved for SCPI and OPCI.

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Of the ISF to the IFIS : what we know of the new tax on the real estate asset

main lines of reform were unveiled, but some unknowns still remain, including treatment that will be reserved for SCPI and OPCI.

The prime minister has confirmed, on 11 September, abolition of wealth tax and its replacement by a wealth tax on estate (IFI) sitting on only real estate. The IFI will be taxpayers who hold a real estate property net taxable, that is to say after deduction of debts, exceeds 1.3 million euros.

The entry threshold in ISF will be same as today and schedule will not be changed. The abatement of 30 % on principal residence will also be maintained. Similarly, real property affected to exercise of professional activity of taxpayer will continue to be exempt.

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But all property or than real estate assets will be excluded from scope of application of this new tax : securities (shares) held by taxpayer, wher or not y are regarded as business assets, investments, banking and financial, works of art, jewelry, furniture, horses, carriages, cash ...

The unknown of SCPI and OPCI

at this stage, we do not yet know how will be treated to real estate funds, including shares of real estate investment trusts (REITS) and undertakings for collective investment in real estate (OPCI). Will y be considered as financial investments exempt from IFIS or as immovable property taxable ? And if so, how will y be treated if y are held through a contract of life insurance ? In doubt, MSPA (French Association of real-estate investment companies) sent a letter to government to ask him to " expressly provide that y are not included in perimeter of base of future IFI ".

More generally, question arises for all of real property which would be owned through a company, such as a real estate company controlled by taxpayer. "Only companies in real estate, that is to say, companies in which fund is invested for more than 50 % in real property be taxed or all companies at height of share that represents ir real estate assets in balance sheet ", asks Yvan Vaillant, director of engineering heritage at Edmond de Rothschild.

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anyway, almost all of taxpayers subject to ISF should see ir taxes decline as of next year, and this all more strongly that ir heritage includes a significant proportion of goods or than real estate. "The tax payable would be reduced from 97 000 to 35 000 euros for a legacy of 10 million euros, half of which is invested in real estate. For a heritage of 2.5 million euros, of which 1.5 million in real estate, tax would increase from 11 000 to 4 000 euros. And a taxpayer at head of a legacy of € 1.5 million, of which € 800,000 invested in real estate repasserait below tax threshold ", details Frédéric Poilpré, director of wealth planning at societe generale private banking.

However, some taxpayers stand to lose. "It is those who are at head of a heritage not primarily of real estate and who came so far to enable cap of ISF. It may be that y may not be able to take advantage of this cap due to significant decline in ir tax limited to ir sole real estate assets, " explains Yvan Vaillant.

Finally, reduction in wealth tax (ISF) enjoyed by taxpayers investing in capital of a SME would be purely and simply deleted. But tax reduction of 75 % in case of donations made to certain organizations of general interest should be maintained.

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