Real estate wealth tax applies to those who own real estate that exceeds 1.300.000£ on January 1st of a year.

The value that should be retained for the declaration is the market value, which is the value of the property when sold.

There are a variety of valuation methods that can be used: real estate appraisals, comparison with recently sold properties, or even on the basis of rental yields.

To prove the values retained in the event of an inspection, it is suggested to keep a record of its estimate.

Downward value correction could be advantageous for certain real estate assets. Legal and defined discounts are within the realm of possibility. The main residence is currently receiving a 30% discount, please inquire. The property must be held directly and not through an SCI to receive this allowance. According to tax administration practices, 'tolerated' deductions may also be applied.

These allowances are linked to specific situations: taking into account situations of co-ownership, obsolescence, or insolvency.

There are goods that can be exempted completely or partially, with conditions, like forests, professional goods, or rural goods that are rented with an emphytetic lease.

What are the dangers of underestimating a property for the ISF?

It's tempting for certain taxpayers to undervalue certain goods in order to save a little on IFI. Several types of risks are involved in this practice.

It's obvious that there's a risk of fiscal adjustment, which is an additional IFI that needs to be paid, typically with surcharges and late payment interest. In theory, the administration can be moved by the retained values for 3 years beyond the current year during the recovery period. In actuality, it is often six years beyond the current year.

The administration can extend its recovery period if it doesn't have all the necessary elements to conduct an in-depth control. It's a double-edged sword when the IFI is announced at the same time as the N-1 income, as it allows adjustments to be made over a longer period!

In addition, it is worth noting that the tax administration has undergone a significant modernization in recent years. It is now capable of conducting large-scale collections and recoveries to track fraudsters.

Tax audit risks extend beyond the IFI itself. Inheritance or gift tax matters can be rectified if the value is retained by the taxpayer in their ISF due to an undervaluation. Even when there are discrepancies in the values retained during these operations.The tax authorities may not be pleased, but undervaluing a property at the IFI can also have consequences for its bank. Banks are now obligated to report any suspicions of tax evasion they may have.

Providing all your tax documents, including your IFI declaration, is required when opening an account with a bank. The bank must file a suspicious transaction report if the retained values are too caricatured. Moreover, the process of financing or refinancing the property was sensitive. It's obvious that the bank won't be able to lend an amount that's much different from the one that was debited for the tax declarations.

As a result, tax administration has a wide range of sources of information and potential control. The risk of not being able to freely manage one's real estate assets remains.