Are cohabiting partners jointly subject to MFI?

In the intricate realm of taxation, nuances often define the obligations and responsibilities of individuals. A common query that arises, especially for cohabiting partners, pertains to the Immovable Property Tax (IFI) and the intricacies surrounding joint declarations. We delve into this complex landscape with the guidance of Nathalie Magne, an Inheritance Engineer at Edmond de Rothschild, seeking clarity on whether cohabiting partners are jointly subject to IFI.

Understanding Immovable Property Tax (IFI)

The IFI, or Immovable Property Tax, comes into play when the net real estate assets of a tax household surpass 1.3 million euros on January 1st of the tax year. It’s a significant financial threshold, and how a tax household is defined varies depending on the specific tax in question. While married couples or those in a registered partnership are mandated to file a joint declaration for IFI, the process becomes less straightforward for cohabiting partners.

The Query: Do Cohabiting Partners Need to Declare Joint Real Estate?

The fundamental question at the heart of this matter is whether cohabiting partners are obliged to declare joint real estate for the purpose of IFI. To unravel this complexity, we turn to the expertise of Nathalie Magne.

The Legal Framework: Article 964 of the General Tax Code

Article 964 of the General Tax Code plays a pivotal role in shaping the obligations of individuals living in known cohabitation. It asserts that individuals in such cohabitation arrangements are subject to joint taxation, irrespective of whether they choose to report their income separately.

Defining Stable and Continuous Life Together

The crux of the matter lies in the definition of a “stable and continuous life together.” Legally, this refers to a de facto union characterized by a shared life that exhibits stability and continuity. This applies to couples of different or the same sex who live together in a manner akin to a committed relationship (ยง 515-8 of the Civil Code).

Implications for Cohabiting Partners

If cohabiting partners fall within this legal definition, their net worth as of January 1st of the tax year becomes the basis for IFI. This includes all taxable assets belonging to each partner and their minor children. It’s crucial to note that this encompasses not only direct ownership of immovable assets but also shares or stakes in companies holding real estate for a significant portion of their portfolio.

Complexities in Cases of Marriage to a Third Party

A notable twist in the narrative arises if one of the cohabiting partners is also legally married to a third party. In such scenarios, they remain subject to joint IFI taxation with their legal spouse, and their property is then linked to their legal household.

Expert Insights from Nathalie Magne

Navigating the intricacies of IFI for cohabiting partners requires a nuanced understanding of legal definitions and tax implications. Nathalie Magne, as an Inheritance Engineer, brings clarity to this subject, shedding light on the intersection of relationships and taxation.

Conclusion: Deciphering the Tax Landscape for Cohabiting Partners

In the ever-evolving realm of taxation, the interplay between relationships and financial obligations demands careful consideration. For cohabiting partners, the landscape of Immovable Property Tax introduces complexities that necessitate a clear understanding of legal definitions and tax frameworks. As individuals strive to fulfill their tax obligations, the guidance of experts like Nathalie Magne becomes invaluable, offering a roadmap through the intricate terrain of IFI. The key takeaway is that in the eyes of the tax code, a stable and continuous life together may lead to joint taxation, underscoring the importance of awareness and informed decision-making in matters of personal finance and relationships.

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