The Fortune Tax and Real Estate: get the valuation just right!
It’s just a few weeks until the deadline for the submission of the Fortune Tax return, by which time every taxpayer who owns one or more properties must submit their annual return with an estimation of the value of their real estate. Here’s a reminder of the different valuation methods accepted by the tax office and the deductions permitted.
*Methods of assessment
Every year, when the moment comes to complete the Fortune Tax return, the market value of a property must be reassessed, as if the taxpayer had sold it on the 1 January 2016.
To come to this end result, the most simple and most used method for ‘classic’ properties is the ‘comparison method’. This consists of looking at previous, fairly recent, sales of similar homes in the same neighbourhood.
This information is freely available from the “Patrim” database via the website impots.gouv.fr. You simply enter your property’s details (address, surface area, ???) and are provided with a list of similar properties and their sale price.
Note: this list must be further refined, using the characteristics of your property such as how sunny it is, what floor it is on, the absence or presence of eyesores or excessive noise, whether it has a terrace…
Whether classic or atypical, once the value is determined, the taxpayer can apply the following deductions:
- A deduction of up to 30% off market value for a primary residence owned via a SCI (société civile immobilière – a corporation with the specific aim of facilitating the management of property owned by several people)
- A deduction of between 25 and 40% for a leased property occupied as a principal residence
- A deduction of 10-20% for a leased property occupied as a secondary residence or as a place of work
- A deduction of up to 10% for a jointly owned property
Note: a recent judgment of the Cour de Cassation dated 16 February 2016 permits two deductions to be applied cumulatively to a property’s value in the context of the Fortune Tax return.