France’s wealth tax on property has a rule that most buyers only discover after they have moved. For the first five years after you become a French tax resident, the impôt sur la fortune immobilière looks only at what you own in France. Your apartment in Amsterdam, your parents’ house you inherited in Portugal, the plot in Italy: none of it counts. Then the window closes and all of it does.
Written into the tax code itself, the rule applies whatever your nationality, and it does not depend on why you moved. For anyone buying property in France and making it their home, that is worth more than a discount on the price. It is also the point where most of the confusion starts, because the exemption is about where your assets sit, not about how much you own.
What the five-year window actually exempts
Article 964 of the Code général des impôts creates the tax and sets its two territorial rules. A person whose fiscal domicile is in France is taxed on property assets held in France and abroad. A person whose domicile is elsewhere is taxed only on French property, and on shares of companies to the extent those shares represent French property.
Between those two rules sits the exception. A person who was not fiscally domiciled in France during the five calendar years preceding the year of arrival is taxable only on French assets, and that treatment lasts until 31 December of the fifth year following the year the domicile was established. Its own doctrine, in BOI-PAT-IFI-10-20-20, adds the two details that matter in practice: the reason for the move is irrelevant (a job, a retirement, a family), and a spell back abroad during the window does not destroy it.
So the exemption covers foreign property, not French property. It does not raise the threshold, it does not lower the rates, and it does not touch the annual property tax that every owner pays, the taxe foncière, which is a local tax with its own rules.
Who qualifies, and how the years are counted
Two conditions decide it, and both are about the past rather than the present. You must be fiscally domiciled in France in the year in question, and you must not have been fiscally domiciled in France in the five calendar years before that. The test is the one in article 4 B of the code: your home, your main place of stay, your professional activity, or the centre of your economic interests.
Calendar years, not rolling months, is the part people get wrong. If you arrive in September 2026, the five-year clock runs from 2027, and the exemption covers the IFI due for 2027 through 2031, ending on 31 December 2031. The IFI assessed on 1 January 2032 is the first one that looks at your worldwide property. Arriving in December rather than January changes nothing: the year of arrival is a full year for this purpose.
- Any nationality qualifies, including French nationals returning after five years away.
- Any reason for the move qualifies: employment, retirement, family, or a purchase that became a home.
- An interruption does not necessarily break the window; the administration accepts an aller-retour during the five years.
- What breaks it is having been fiscally resident in France in any of the five preceding calendar years.
The French property is taxed from the first January
Easy to misread as five tax-free years, it is not. It is not. The house you buy near Montpellier is French property, so it enters the calculation from the first 1 January after you own it, alongside any other French property you hold. What the window does is keep the rest of your portfolio out of the sum.
That matters because of where the threshold sits. The tax applies when the net taxable value of the relevant property exceeds 1,300,000 euro on 1 January, and net means after deductible debts, principally the mortgage. A French house bought with a loan is often well under the line even when its market value is not, and a portfolio of French rentals can cross it without any single building looking expensive.
Two adjustments soften the entry. The dwelling you occupy as your main residence is valued with a 30% abatement under article 973, one dwelling per household. And for net taxable values between 1,300,000 and 1,400,000 euro, a décote is subtracted from the bill.
What the bill looks like once the window closes
Progressive and starting below the threshold, the scale is the quirk that surprises people. Once the 1,300,000 euro line is crossed, the tax is computed from 800,000 euro upwards: 0.50% on the band to 1,300,000, 0.70% to 2,570,000, 1% to 5,000,000, 1.25% to 10,000,000, and 1.50% above that.
| Net taxable value on 1 January | Rate on that band |
|---|---|
| Up to 800,000 euro | 0% |
| 800,001 to 1,300,000 euro | 0.50% |
| 1,300,001 to 2,570,000 euro | 0.70% |
| 2,570,001 to 5,000,000 euro | 1% |
| 5,000,001 to 10,000,000 euro | 1.25% |
| Above 10,000,000 euro | 1.50% |
Service Public’s own worked example, verified on 6 March 2026, uses a net taxable estate of 1,350,000 euro. The gross tax is 2,500 euro on the first band plus 350 euro on the second, so 2,850 euro. The décote is 17,500 euro minus 1.25% of 1,350,000 euro, so 625 euro. The bill is 2,225 euro.
From the sixth year the same calculation runs on worldwide property, converted at the exchange rate on 1 January. A house in Spain, a flat in Berlin and a share of a family company holding land all join the total. Two reliefs survive the change:
- Donations to qualifying bodies cut the tax by 75% of the amount given, up to 50,000 euro.
- The plafonnement caps the combined IFI and income taxes at 75% of the previous year’s income.
Where newcomers get caught out in practice
First comes the sale. The IFI is an annual holding tax and it has nothing to do with capital gains tax, which is charged when you sell and follows its own rules, including the exemption that builds up over the years of ownership for a second home. Paying one does not mean you have paid the other.
Second is the entity. Property held through a company is not invisible: shares are taxable to the extent they represent French property, and the debts of that company are deductible only in proportion. A structure set up for privacy can therefore create a valuation exercise every January.
Third is the calendar. The tax is declarative and is reported with the income tax return, on the IFI annex, for anyone whose relevant property is above the threshold on 1 January. A first declaration in the year after arrival is where newcomers most often discover that the exemption was never automatic: it is a rule you apply, not a letter you receive.
Frequently asked questions about the IFI
Does the five-year rule apply if I buy before I move?
Yes, provided you were not fiscally resident in France in the five calendar years before the year you arrive. Buying first and moving later is common, and the clock starts with the year the domicile is established, not the year of the purchase.
What happens if I sell the French house during the window?
The exemption is about the location of the assets, so selling does not end it. The remaining French property stays in the calculation, and your foreign property stays out until the window closes.
Is the main-residence abatement available to non-residents?
The 30% abatement in article 973 applies to the dwelling the owner occupies as a main residence, one per household, and the tax administration applies it within the territorial rules above. A non-resident owning a French home they do not occupy does not get it for that property.
Where is the rule written down?
In article 964 of the Code général des impôts on Légifrance, in the administration’s commentary BOI-PAT-IFI-10-20-20, and for the scale and the décote on Service Public.
