Each year, any taxpayer whose real estate reached 1 300 000 euros must evaluate to 1 January for the amount to be reported to the IFIS (tax on wealth tax, the ISF version Macron), in may or June next. An assessment binding, but indispensable, under pain of incurring the wrath of the tax administration which does not hesitate, in case of undervaluing or devoid of any basis to apply penalties of 0.40% per month and an increase of 40% of the tax payable.

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renovations may result in higher capital gains

It is up to the taxpayer to establish, under its responsibility, the market value of each property held, this value is “the price at which the property could or could normally be negotiated, at the time in question, as a result, in particular, the analysis of the price declared when mutations of goods with identical characteristics and applied to the same purpose”, according to the tax administration. In clear, the price of the market, according to the law of supply and demand. One can ask for an assessment of a notary, a real estate agent who knows the local market. It can connect to the service, heritage museum, established by the tax administration, which will, according to the criteria reported, the sale prices of properties deemed to be similar or at least comparable. Another possibility: to consult the barometer real estate of notaries for the province or the site Paris notaires for Paris and the Ile-de-France.

But this does nothing to adapt the value according to criteria specific to the property: thus, for equivalent lodging, the top floor will be worth more than a ground floor, housing renovated and isolated has a greater value than the same prior work…

If this property has already been declared in the wealth tax, the taxpayer can resume the previous assessment and the correct market data (increase, decrease), unless this property has been deeply modified in the course of the year: renovation, screed… which gives it value or to the contrary, degradation, loss of sight, new sound nuisance that generates a discount. It will then again be evaluated by a professional.

Value the first of January

The value adopted for the establishment of the tax is the same as the first day of January of each year. No change of value, either upward or downward, is taken into account between the first of January and the date of payment of the tax in may or June of the same year. For example, a taxpayer has to put a new roof in march 2017. For the ISF paid in June 2017, it said the value of the property as at 1 January 2017 before work. This is only for the IFIS 2018 that he will have to take that into account and correct the assessment to the January 1, 2018.

downgrades possible

in order To take account of the special situation of certain property (occupied, difficult to sell), the tax administration will accept haircuts on their values.

1/ The principal residence. It is not tax-exempt but benefits from a tax allowance of 30% of its value. For a couple, however, this deduction is granted only on one property, even if they each establish an income tax return separately.

On the other hand, when the spouses are separate property and do not live under the same roof or have been the subject of a decree of judicial separation and to the extent that they have effectively ceased to exist, the deduction of 30% may apply to the principal residence of each spouse, as they are subject to taxation separate to the ISF. This abatement of 30% is also granted for the dwelling occupied as the main residence, which is included, for its value in full property, in the estate of the usufructuary. The heirs, owners at 1 January of an immovable encumbered with a right for temporary housing for the surviving spouse benefit also.

2/ Housing held in joint ownership. Each owner enjoys a tax allowance of 20 % of its share of the value of the building, in order to take account of the constraints and difficulties of resale. But for the small history, it was necessary to the judgment of the Court of Cassation on 16 February 2016 to recognize and to bend the tax administration!

3/ Housing in the rental. The discount (tolerance tax) varies according to the nature of the lease and the remaining period. Even if the authority noted from the outset that “the immovable property may not qualify for the deduction of 30 % granted to the principal residence”, the residence has undergone a true discount, not a free occupation. But then, how do we assess this ? Again, nothing is written in the texts

It can achieve:

• 30% to 40% for goods still subject to the 1948 act;

• 10% to 20% for property residential rented in the 1989 act;

• 20% for premises subject to a commercial lease;

and 10% for the property rented furnished.

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4/ Location held in joint ownership and rented. The two discounts of 20% (for joint ownership, the other for the location) can be combined, according to the judgment of the Court of Cassation on 16 February 2016.

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