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Optimising personal and real assets (IFI, capital gains, and more)

France heavily taxes the acquisition (registration duties), holding (wealth tax on property) and transfer (capital gains tax, gift and inheritance duties) of property.

If you are considering acquiring real property or a stake in a company, you should ask yourself how it will be held from the point of view of its acquisition, holding and then transfer, whether for no consideration (by gift or inheritance) or for value (sale).

For tax optimisation, an asset must be held in a way that is tailored to its use. For example, a property occupied as a primary or secondary residence should not, except in very rare cases, be held through a company subject to corporate tax, which should really be used only for investment properties. If you own a business, you can contribute the securities of your company to a holding company to finance the development of your group or optimise your remuneration package, but it’s rarely a good idea to set up a holding company just because your neighbour did.

What is true for a new investment is also true for optimising existing assets. If you own a lot of investment property for example, you might decide to sell it in order to stop paying the wealth tax on property (impôt sur la fortune immobilière - IFI), but you might also decide to refinance it to reduce your tax base and/or take advantage of a strategy to cap your IFI.

Unfortunately, it is not always possible to optimise all the taxes concerned, but asking the right questions can lead to making the right choices.

If you wish to acquire property or reorganise your assets, Bornhauser can help you with all the transaction’s tax aspects so you can structure the investment to your advantage.