In March 2018, we published an article entitled “Tax on Real Estate Fortune (Impôt sur la Fortune Immobilière)” which dealt with the bases, valuation rules, declaration and calculation of this tax. These rules are still current and you can therefore always refer to them.
Now we are going to show you the main information that should be mentioned in the 2042-IFI form and its various appendices. We will not expose all the details and specific cases. Of course you can contact us for more information!
I – 2042-IFI Form
It should first be specified that a single 2042-IFI declaration is filed when the person liable also subscribes an income declaration. The IFI taxpayer who does not file a tax return must enclose with his 2042-IFI declaration a 2042-IFI-COV identification declaration.
Identification of the person liable
Marital status and address: these elements are in principle already indicated, any errors must be corrected.
The partner linked by a PACS or the partner must also register his civil status. The debtor whose identity must appear in this frame is the deceased when the declaration is made by the estate.
In the event of cohabitation, the entire property portfolio of the two cohabiting partners must be declared on a 2042-IFI declaration to be filed with one or the other income declaration. The cohabitation situation must be indicated by checking box 9GL on page 1.
In case of marriage or PACS in 2019, and option for a separate declaration of income in 2019, box 9 GM must be ticked.
Identification of minor children
This section is reserved for the identity of minor children of the debtor or of his spouse, partner or cohabiting partner on January 1st 2020. These are the children whose declarant, his spouse, his notorious cohabiting partner has legal administration.
Signing of the declaration
The declaration must contain a single signature if the person liable is single, divorced or separated from the body by virtue of a judicial decision.
For married persons not subject to separate taxation and for persons linked by a PACS, the declaration must include the joint signature of both spouses or partners.
For people living in a well-known cohabitation, the signature of the one of the two cohabitees who is responsible for the declaration must be affixed, this formality can be accomplished indifferently by one or the other.
The sums appearing on the annexes numbered from 2 to 6 (which we will see in detail) are shown on this page on the lines bearing the same references.
The calculation elements shown in this page will be used as a basis for the calculation of the amount of the IFI carried out by the tax administration.
II – Appendix 1: Properties assigned to professional activity
The taxpayer must complete this annex 1 if he owns, individually or within the framework of a company, goods used for professional activity, exempt from IFI.
Must be mentioned:
- the exemption linked to the sole condition of exercising a professional activity primarily in a company (individual or company), mention should be made of the name, the Siren number, the address and the activity of the company;
- the exemption related to the function and the possession of social rights for the leaders. Must be mentioned, the name, address and activity of the company, the function exercised in the company, the percentage of capital that the debtor and the members of his family group hold directly or by company interposed in the company.
III – Appendix 2: Properties held directly (buildings and lands)
This document is made up of two parts. The first page is devoted to the declaration of built buildings and non-built buildings that are not exempt.
On the second page, have to be declared timber and forests, shares of forest groups, rural property leased on a long-term lease, shares of agricultural land groupings (GFA) and (GAF) partially exempt.
Part 1 of Annex 2 (buildings and lands)
- Column 1 Numbering of goods: a number must be assigned to each good indicated on each of the annexes. The primary residence must be listed in the appropriate column on the first line.
- Column 2 Date and purchase price: for each building, you must indicate the date of purchase and the purchase price.
- Column 3 Nature of the property and location: it is necessary to indicate here the nature of the building, i.e. individual house, apartment in a collective building, collective apartment building (if you own the whole building), isolated room, box or garage space, shop, office, workshop, shed.
The nature of taxable lands must be specified (building land, cropland, meadow, orchard, vineyard, woods and forests, wasteland, moors, ponds, marshes, etc.).
Property located abroad: Natural persons having their fiscal domicile in France are also taxable on their immovable property and property rights located outside France.
- Column 4 Characteristics of the property: this is the area and the number of rooms.
For the main residence and built buildings, it is necessary to indicate:
- the total area of the land,
- the total living area in square meters.
- Column 5 Taxable fraction of mixed properties: this concerns properties that are partially used for professional activity, only the percentage or non-professional fraction of their value should be mentioned here.
- Column 6 Declared value:
- Main residence: its value must be subject to a reduction of 30% on the market value of the property free of any occupation.
- Other buildings: the value of buildings is indicated in the first column and land in the second.
The value to be declared is in principle the market value on January 1st 2020. Discounts may be applied to the market value of the property when it is rented or jointly owned.
In order to determine the market value to be declared, the administration makes available to the taxpayers the property values declared on the occasion of transactions which have occurred during the last 5 years (consult the PATRIM service for this).
- Column 7 Nature of the rights held: this only concerns taxpayers who do not have exclusive ownership of the property (joint possession) or if they do not have full ownership of it.
Part 2 of Annex 2 (rural goods, timber and forests… partially exempt)
- Column 1 Numbering of goods: each good is normally the subject of an article number. However, can be grouped together, several plots even non-contiguous located in the same commune, the woods and forests of a single holding, all the parts pertaining to the same grouping.
- Columns 2, 3, and 4 Nature of goods, location and characteristics: as above, the information concerns the nature, address, surface of the land or the names of the land groups.
- Columns 5, 6 and 7 Declared value: timber, forests and shares of forestry groups benefit, under certain conditions, from an exemption of three quarters of their value. The taxpayer must indicate in column 5 their value before deduction of 75%.
Rural properties leased on a long-term basis GFA and GAF shares which cannot be considered as professional assets are exempt up to 75% of their value if it does not exceed 101,897 €, and 50% beyond this limit.
- Column 8 Nature of the rights held in the property: this column concerns the nature of the rights when the person liable does not hold full ownership (usufruct, right of use, bare ownership, etc.).
IV – Appendix 3: Properties held indirectly
This appendix must include the fraction of the value of the securities of companies representative of real estate property and rights, regardless of the number of interposition levels.
It also includes property and property rights held via investment funds and collective investment schemes or housed in life insurance contracts.
- Columns 1 to 4 relate to the article number, the name of the company or body, the Siren number of the company or body and the percentage of capital held.
- Column 5 Market value of the rights, shares or stocks: if the assets of the company or the organization whose debtor holds the titles includes buildings, it is necessary to indicate the market value of these titles. The person liable is taxable at the IFI on the fraction of the market value of these securities representative of taxable immovable property and rights, up to the amount of its shareholding in the company or organization.
- Column 6 Declared value: to determine the taxable fraction, a coefficient corresponding to the ratio between, on the one hand the market value of taxable property or property rights and, where applicable, the value of shares or shares representing these same goods and, on the other hand, the market value of all the assets of the company or organization.
The amount obtained is multiplied by the participation rate held in the company or organization.
V – Appendix 4: Liabilities and other deductions
- Column 1 Numbering of articles: as in the other annexes, each article is numbered in column 1.
- Column 2 Nature, object and date of the debt: the date of the contract, deed or court decision from which the debt results, the nature of the debt, must be indicated.
The following are deductible:
- – the co-ownership charges due on January 1st of the tax year;
- – the mortgage loans contracted for the acquisition of taxable property;
- – the capital constituting the life annuity;
- – the property tax (excluding tax on household waste);
- – the tax on vacant premises;
- – the tax on offices in Île de France;
- – the theoretical IFI;
- – gift or inheritance tax pending payment on January 1st.
- Columns 3 and 4 Name and address of the creditor and amount due on January 1st: Note that column 4 is divided in two. The first must contain the amount due on January 1st of the taxation year for the repair, maintenance and improvement, construction or enlargement of taxable property. The second must contain the amount remaining due on January 1st of the taxation year of other debts.
VI – Appendix 5: Calculation of the elements of the ceiling
Persons concerned: benefit from the cap on those liable for the IFI who have their tax domicile in France and non-residents established in another State of the European Union when the latter derive all or almost all of their income from France.
The cap system allows taxpayers of the IFI 2020 to spend no more than 75% of their income on paying their taxes. If this percentage is exceeded, the amount of the IFI is reduced by the excess.
Annex 5 contains two tables:
- A table A which makes it possible to determine the amount of taxes due in France and abroad in respect of income for 2019 and used for the calculation of the cap. This amount must be reported on line 9PR, page 2 of the 2042-IFI declaration;
- A table B which makes it possible to determine the amount of income to be taken into account for this same calculation, amount to be reported on line 9PX, page 2 of the 2042-IFI declaration.
VII – Appendix 6: IFI paid outside France
This form is used to calculate the wealth tax paid outside France, which will be chargeable to the IFI due in France.
Only persons who, domiciled for tax purposes in France on January 1, 2020, own immovable property and property rights located outside France must complete this annex if they have paid tax outside France, the characteristics of which are similar to those of the IFI.
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