Of the ISF to the IFIS: what changes, what remains

The solidarity tax on wealth will become a tax on the real estate asset. In the meantime, affected taxpayers caonservent a wide range of solutions to reduce the bill.

at first glance, the reform of the solidarity tax on wealth (ISF) has no immediate impact and does not provide for exemptions, no tax or additional penalty. "We will replace the ISF by a tax on the real estate asset (IFA), announced the program of Emmanuel Macron. Sitting on the only real estate assets, it will be based on the same threshold (€1.3 million), the same schedule and the same rules (tax relief of 30 % on the principal residence) that the current ISF. Person will suffer any increase in tax during the replacement of the ISF by the IFIS."

The rules of the ISF are unchanged, but the bulk of the investments that were subjected to it are exempt, except real estate assets and land. The life insurance contracts, bank accounts and passbooks, stocks and other securities would be exempt from the IFIS. Good news for the richest taxpayers, who will pay less of IFIS in 2018 that ISF in 2017, and for those whose only real estate assets will be less than 1.3 million euros in the January 1, 2018, and which will also be exempt. 340 000 taxpayers were paying 5.2 billion euros of TFR per annum (data 2015). This amount would be reduced by more than half with the IFIS.

A disaster for the sector of the tax-exemption

However, this reform makes a lot of unhappy. First, those who do not, or not enough, because they have an important heritage mainly invested in the stone. They denounce a reform unfair stigmatising landlords, producers of a housing service that is useful to society and which supports the economic growth, especially in construction. Then, the processing of the ISF in IFIS is a disaster for the sector of the tax exemption, that is to say, those who live of investment by the richer taxpayers in return for a carrot tax.

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Thanks to the Tepa law, which promised more work, employment and purchasing power to the French, those liable to pay the ISF could benefit from a tax reduction of 50% on their investments in the capital of a SME to a maximum of 90000 euros each year (45000 euros of reduction of ISF), or in mutual funds at risk (FCPR), investment funds proximity (FIP) or still in innovation (FCIC), in the limit of 36,000 euros (18000 euros of reduction of ISF), the two being combined, but may not exceed 45000 euros of reduction of ISF.

With the transformation of the TFR in the IFIS, the State considers that the financing of SMES and start-ups subsidised with blows of tax cuts can no longer be justified, especially as the government agrees to further tax relief to help businesses and their patrons, such as reducing the corporate tax and the levy one-time lump sum (PFU) of 30 % on dividends.

>> Practice : Download our guide to council for défiscaliser by investing in real estate

the wealth tax has not totally disappeared

Even refocused on the only real estate assets and land, the tax on capital has not totally disappeared. If the new IFI works as the candidate Macron announced, with "the same threshold, the same schedule and the same rules as the current ISF", it will be for taxpayers whose real estate property exceeds € 1.3 million at January 1, next.

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Between 1.3 and 2.57 million euros, them to declare their assets, gross and net taxable, with the reductions, if any, on their income tax return. They then receive a notice of tax due for the 15th of September. Those whose heritage reached 2.57 million have until 15 June to file their declaration of ISF with the cheque for.

in the Face of this deadline, the taxpayers concerned will likely be fond of solutions to reduce the taxation of their heritage. The real estate will penalise the most heavily taxed if they don't have liquidity that can be mobilized to reduce their IFIS. In the end, the IFI could encourage owners to sell assets to increase their financial assets tax-exempt, whether it be life insurance or stock market investments.

In the worst case, those whose heritage and the activity does not earn enough in the eyes of the tax expected to be able to benefit from the cap. According to this mechanism put in place for the ISF, which must be maintained with the IFIS, the whole of the taxes paid by a taxpayer, the IFIS included, must be capped at 75% of its total revenues and other financial resources, including for example the interests of life insurance, even if they have not been removed from the contract.

These assets will remain exempt from the IFIS

For the others, if they have a little money to devote to the reduction of their IFIS, solutions remain. Spared by the reform of the tax reductions, the tax-exemption philanthropic and remains the royal way. It allows for the most generous reduce their IFIS to the tune of 75 % of their donations, in the limit of 66667 euros, 50000 euros reduction of IFI.

moreover, even if the IFIS specifically targets the propertytee real estate and land, many land assets beyond at least partially, the ISF should remain exempt from the IFIS. This is the case of groupings of land with vineyards (GFV), forest (GFF) or agricultural (GFA), which may benefit from a total exemption from wealth tax if a family member is the operator. Otherwise, they are exempt for 75% of their value up to 102717 € and 50% beyond. An advantage that has made the success of the GFV Saint-Vincent.

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"I have created a first grouping land wine there are twenty-three years old," says Andrew Way, its founder. Today, we are at 38. Initially, investors could be attracted to the tax advantage, but many have re-invested interest in the work of the wine growers that they appreciate the expertise." "Under certain conditions, the units of the GFV are also granted partial exemptions from rights of succession," adds Sabine Eyquem, the new chair of the société Saint-Vincent.

above all, the annual income of "rents" given to farmers by the owners of GFV are paid... in cash, with lots of good bottles. An effective remedy to get his taxes, or toasting to his good fortune, to be consumed of course in moderation.

Tepa Law: the tax relief via the SME outstanding

The ISF, and especially the reduction of ISF so-called "Tepa law", was a gold mine for sellers of tax-exemption. Even planed since 2011, this advantage resulting from the tax reform "work, employment, the purchasing power of the French president, nicolas Sarkozy, was in 2017 to reduce its TFR by 50% of investment in SMES up to 90000 euros, or 45000 euros of tax savings. The subject to the ISF have bought 500 million euros of shares in start-ups and other SMES to take advantage of it by 2016.

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With the passage of the ISF to the IFIS, the disappearance foretold of this niche is disturbing to those who live on it. "Remove the incentive ISF is an absolute tragedy, unless it is replaced by a consequent reduction in the income tax," proclaims Harold Zimé, co-founder of Hoolders. This platform of crowdfunding organised evenings of "CoFunding Live" at the Folies Bergère, thanks to which start-ups were able to collect 370000 euros in two hours, with affluent investors!