Got French real estate? IFI hits at €1.3M, no escape via ownership structure.
TL;DR
France's IFI taxes net real estate over €1.3M at 0.5% to 1.5%. French-resident Indians pay on worldwide property (Indian flat included unless treaty-exempted). Non-resident Indian owners pay on French property only. Article 24 of the India-France DTAA carves out specific exemptions; here's the math.
By Vipul Sharma, Founder
Reviewed by Preetesh Maloo, Chartered Accountant, NRI Tax Partner
What IFI is and who pays
The Impôt sur la Fortune Immobilière replaced France's old ISF in 2018. It's a wealth tax on net real estate holdings above €1.3 million. The Indian-side counterpart is Section 9 source rule and the India-France DTAA.
Who pays:
French tax residents on worldwide real estate (subject to treaty carve-outs).
Non-resident owners (including Indian-resident Indians) on French-located real estate only.
Who doesn't pay:
Residents in the first 5 calendar years of arriving in France (the régime des impatriés exemption on foreign assets).
Owners of property used for professional activity (under specific conditions).
For an Indian-French banker living in Paris with a €2.5 million Paris flat plus a ₹4 crore Bengaluru flat, IFI applies on both unless you've negotiated treaty exemption. For an Indian-resident Indian holding a €1.5 million Côte d'Azur villa, IFI applies on the villa, and that's the entry point most aren't aware of.
The IFI rate scale
Net real estate value (after deductible debts) brackets and rates:
€0 to €800k: 0%.
€800k to €1.3M: 0.5%.
€1.3M to €2.57M: 0.7%.
€2.57M to €5M: 1%.
€5M to €10M: 1.25%.
Above €10M: 1.5%.
The €1.3M threshold is the entry point; below that, no filing.
For a €2 million net real estate position: tax is roughly €4,500 (approx. ₹4 lakh) per year. For €5 million: roughly €30,000 (~₹27 lakh) per year. The marginal pinch grows fast above €5M.
Deductible debts: mortgages on the included properties, transfer taxes payable, professional debts secured against included real estate. The deduction is capped at the property's fair value.
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India-side interaction
The India-France DTAA's non-discrimination clause doesn't exempt Indian property from IFI for French residents. The provision protects Indian-French citizens from being treated worse than French citizens; both pay IFI on worldwide property under the same rules.
For French-resident Indians, the Indian flat shows up on their IFI declaration alongside their French property. Treaty doesn't shield it.
For Indian-resident Indians holding French property, IFI applies only on the French property. India's Schedule FA disclosure picks up the same property under the Black Money Act 2015 ₹20 lakh safe harbour.
Section 9 of the Income-tax Act treats Indian property income (rental, capital gains) as Indian-source for Indian-resident Indians regardless of foreign IFI. The two systems run independently; no double-tax credit on IFI itself.
The math on a typical Indian-French portfolio
A Paris-based Indian banker (5 years in France, past the impatriés exemption) owns:
Paris flat: €2.5 million (mortgage outstanding €1 million).
Bengaluru flat: ₹4 crore (~€440,000).
Net real estate for IFI:
Paris: €1.5 million net.
Bengaluru: €440,000.
Total: €1.94 million.
IFI calculation (2026 brackets):
€0 to €800k: 0%.
€800k to €1.3M: €500k × 0.5% = €2,500.
€1.3M to €1.94M: €640k × 0.7% = €4,480.
Total IFI: €6,980 (~₹6.3 lakh) per year.
India-side: Schedule FA picks up the Bengaluru flat (above ₹20 lakh safe harbour) and the Paris flat. No Indian-side wealth tax (India abolished its own wealth tax in 2015). Only India-side filing implication is the disclosure.
What we actually do for Indian-French families
We handle the Indian side. The IFI declaration and French real estate appraisal need a French notaire or Expert-Comptable. We coordinate with theirs.
Indian-side scope: Schedule FA filings, NRO interest recovery via the 10% Article 11 treaty rate, ITR-2 with foreign-asset disclosure, Section 119(2)(b) condonation for past years, Form 10F / Form 41 refile.
Pricing is transparent and discussed on the booking call: a flat fee for the cross-border planning project, a small flat annual fee for ongoing filing (including Schedule FA disclosure of French property).
If you've owned French real estate above €1.3M and you haven't run the IFI plus India-side disclosure check together, book free CA appointment for the 15-minute walkthrough. Most engagements identify a Schedule FA gap that's been quietly accumulating.
Frequently asked questions
Q: I'm a French citizen of Indian origin. Does IFI work differently?
A: No. Citizenship doesn't change IFI. Tax residency in France + net real estate over €1.3M = filing required. Citizenship only matters for the impatriés régime (only available to first-time French residents who weren't tax-resident in any of the 5 prior years).
Q: I rent out my Paris flat and the rental income is in India. Does that change anything?
A: No. IFI is a wealth tax on the value of the real estate, not the income. Rental income is separately taxed in France under regular income tax rules.
Q: I sold my Paris flat in 2025. IFI for that year?
A: IFI is computed on 1 January positions. If you owned the flat on 1 January 2025 above the threshold, you owe IFI for 2025. Sale during the year doesn't reduce the year's liability.
Q: I'm moving from Paris back to India in 2026. Last year of IFI?
A: 1 January 2026. If you were French-resident on 1 January 2026 with worldwide property above €1.3M, you owe IFI for 2026. From 1 January 2027, only French-located property counts.
Q: Can I deduct my Bengaluru flat's mortgage against IFI?
A: Yes if the mortgage is secured against the Bengaluru flat itself. Cross-collateral loans (mortgage on Paris flat secured against Bengaluru flat) get partially disallowed. Book free CA appointment for the structuring.
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The exceptions that change the answer
Where the general rule stops applying to you
Every rule below has a carve-out, a cut-off date or a condition that flips the answer. These are the ones that decide real cases.
Black Money Act penalty for non-disclosure of foreign assets
Right now: Rs 10 lakh flat, per year of default
Where it works differently
- Aggregate value of foreign assets (OTHER than immovable property) does not exceed Rs 20 lakh at any time in the year
- No penalty under s.42 or s.43.
- De minimis proviso, raised from Rs 5 lakh to Rs 20 lakh by the Finance (No. 2) Act 2024 with effect from 1 October 2024.
- The person is RNOR or non-resident
- Schedule FA does not apply, so no exposure.
- The obligation attaches to a resident and ordinarily resident.
- The foreign asset is immovable property
- The Rs 20 lakh carve-out does NOT apply.
- The proviso expressly excludes immovable property.
Commonly got wrong
- The de minimis threshold is Rs 5 lakh. Raised to Rs 20 lakh from 1 October 2024.Rs 20 lakh, excluding immovable property.
- NRIs must file Schedule FA. It applies to residents and ordinarily residents only.The obligation starts when you become ordinarily resident.
Treaty rate on Indian interest
Right now: Domestic rate 30% plus surcharge and cess on NRO interest; most treaties cap it at 10-15% under Article 11
Where it works differently
- The account is NRE or FCNR
- Interest is exempt entirely while you are a FEMA non-resident. There is no rate to reduce.
- s.10(4)(ii) and s.10(15)(iv)(fa).
- The bank refuses the treaty rate without a PAN
- Rule 37BC and the Serum Institute / Danisco line say s.206AA cannot override a treaty rate.
- See the case register.
- The exact rate matters
- Per treaty. Do not quote a single figure across countries.
Commonly got wrong
- All NRO interest is taxed at 30%. That is the domestic default. With a TRC most treaties bring it to 10-15%.30% plus surcharge and cess by default. With a TRC and Form 10F, your treaty's Article 11 rate applies, commonly 10-15%.