The amendment that will increase the real estate wealth tax

At the initiative of a group of Socialist lawmakers, an amendment was introduced to standardize the rules for calculating the tax on real estate wealth (IFI). 

For the record, the real estate wealth tax applies to tax households whose net real estate assets exceed 1.3 million euros. 
 

Currently, the 163,895 households subject to the IFI that directly own their real estate assets may deduct from the tax base only the debts related to those real estate assets. The rules are more favorable for French citizens who own real estate assets through corporations, since they can deduct from the IFI tax base not only the debts incurred by the corporation in connection with those assets, but also other debts not related to that real estate portfolio.
 

According to the explanatory memorandum, the parliamentary amendment therefore aims to ensure “equal treatment” by no longer allowing debts not related to real estate assets to be deducted from the IFI tax base. 

"It's an anti-abuse mechanism," explains its lead author, Christine Pirès Beaune, in simpler terms. Introduced on October 13, the amendment was, surprisingly, included by the government in the first part of the 2024 budget bill, which it passed without a vote a few days later by invoking Article 49.3 of the Constitution. 
 

The bill must now be reviewed by the Senate, which may or may not withdraw it. In any case, the government will find it very difficult to scrap it, as doing so would risk reigniting the controversy over the taxation of the wealthy and tax optimization. 
The question remains: how much revenue could this harmonization generate? According to government projections published before this amendment was introduced, revenue from the IFI is expected to increase by 49 million euros in 2024, reaching 2.44 billion euros.