Real Estate: Investment & Asset Management
Real estate investment in France—whether undertaken by residents or non-residents, individuals or corporations—involves complex legal, tax, and estate planning implications, closely tied to the investor’s personal situation and the nature of the asset.
Axtead supports its clients at every stage of their project, from acquisition to transmission, through a bespoke approach:
- Acquisition structuring: choice of investment vehicle (direct ownership, SCI, or foreign entities) based on your objectives (personal use–primary or secondary residence–or rental investment–multi-unit buildings, serviced accommodation/para-hotel services, etc.);
- Tax management: analysis of the applicable tax regime based on the investor’s profile (resident or non-resident), optimized holding strategies, reporting obligations (Real Estate Wealth Tax/IFI, rental income, capital gains, etc.);
- Pre-acquisition Due Diligence: a comprehensive legal, tax, and financial review of the real estate project to identify risks and key areas for vigilance;
- Financing support: validating the legal and tax framework for bank financing and assisting in negotiations with lenders, particularly for non-resident investors;
- Disposal and transfer: anticipating the tax consequences of a sale or transfer and implementing appropriate structures (e.g., gifts, split ownership, contributions to a company).
We ensure that every stage of the transaction is secure while aligning with your long-term tax and wealth management objectives.
Questions
Acquiring a primary or secondary residence through a legal entity (e.g., SCI, SARL) carries significant tax consequences. Indeed, several favorable tax regimes are excluded under such structures:
- The 30% relief on the value of a primary residence for Real Estate Wealth Tax (IFI) purposes does not apply if the property is held through a company.
- The 20% relief applicable for estate tax purposes is also discarded.
- The tax exemption on the sale of a primary residence is strictly limited: it requires the company to be tax-transparent (impôt sur le revenu), the property to be provided for free to the occupying shareholder, and the relief only applies in proportion to that shareholder’s rights. The exemption is entirely lost if the company is subject to corporate income tax (IS).
Furthermore, from a civil law perspective, holding property through a company may deprive a non-shareholding spouse of legal protections related to the “family home”, including temporary occupancy rights or the lifelong right of use and habitation in the event of death.
While we do not systematically discourage such structuring, it is essential to fully identify the civil and estate planning implications before proceeding.
The Real Estate Wealth Tax (Impôt sur la fortune immobilière-IFI) applies to individuals holding net real estate assets exceeding €1,300,000 as of January 1st of the tax year, whether held directly or through companies.
- As a French tax resident, you are generally subject to tax on your worldwide real estate assets.
- If you have not been a French tax resident during the five calendar years preceding your return, you may benefit from a impatriate IFI regime: for the first five calendar years following your move, you will only be taxable on your assets located in France.
This temporary regime effectively limits the scope of your IFI liability upon your return to France, provided all eligibility criteria are met.
It depends on your tax status regarding furnished rentals. To be exempt from IFI, the property must be used for a professional furnished rental activity. This requires meeting three cumulative conditions:
- Gross annual receipts from furnished rentals by the tax household must exceed €23,000;
- This income must represent more than 50% of the household’s total professional income (excluding pensions);
- The activity must be carried out as a principal and professional activity.
If these conditions are met, you are considered a Professional Furnished Landlord (loueur en meublé professionnel-LMP) for IFI purposes, and the properties involved are exempt as business assets.
Otherwise (Non-Professional Furnished Landlord–loueur en meublé non professionnel-LMNP), the properties are included in your taxable IFI base.
Please note: the criteria for professional status under the IFI differ from those applicable to Income Tax. A specific legal analysis is therefore essential.
