Are we necessarily rich when we start to pay tax on real estate wealth? In other words, when you have real estate assets worth at least 1.3 million euros. For Eric Zemmour, the answer is no. Guest of franceinfo, Monday, November 22, the far-right polemicist advanced this argument: “1.3 million in Paris, it’s a 100 m2”. And to conclude that “they are not what we call rich”.
The essayist considers that this contribution, which replaced the wealth solidarity tax (ISF) since 2018, is “a confiscatory tax”. Because “it only affects housing”, gold “the price of this housing has increased considerably, at least in the big cities”. For those who have not yet announced their candidacy for the presidential election, “the main residence should be taken out of this calculation”. Eric Zemmour’s position raises a question: from what threshold are we considered to fall into the category of “rich” in France?
Let’s start with a clarification: if you have 1.3 million euros, it is not 100 m2, but rather 121 m2 that you can afford in Paris. In the capital, the average price per square meter is indeed 10,790 euros, according to the real estate price map of the Chamber of Notaries of Paris, established at the end of September. The estimate made by Eric Zemmour corresponds to the prices charged in the beautiful districts of the center of the capital. The average price per square meter is close to 13,000 euros in the 2nd, 3rd and 5th arrondissements and exceeds them in the 1st, 4th, 6th and 7th. In the capital, the price per square meter has soared, increasing by 30% in five years, even if the increase was only 0.1% between 2020 and 2021. Most of these districts appear in the list of cities where the richest 10% of the French population live, according to INSEE data from 2017, noted the Observatory of Inequalities at the end of 2020.
Once this observation has been made, the question remains unanswered: where do we stand compared to the rest of the French when we have real estate assets of at least 1.3 million euros and that we are therefore subject to real estate wealth tax (IFI)? To have the answer, we must look at the method of calculating the IFI and therefore the amount of net wealth. Because, as Bercy reminds us, the IFI “is calculated by taking into account your taxable net wealth on January 1 of the tax year”. “The net taxable wealth is the sum of the taxable values of your real estate, from which deductible debts are subtracted”. That is to say the loans taken out to buy the property or the expenses made within the framework of construction or expansion works for example, details the tax services. A reduction of 30% on the value of the main residence is also applied.
The net wealth of French households has been studied by INSEE. Its latest survey on the subject was published this year based on data dating back to 2018. By owning real estate assets of 1.3 million euros, we are richer than 50% of households, half of households owning less than 117,000 euros in net wealth. Such real estate assets correspond to the category of “households with high assets”, which hold on average gross assets of 1,279,100 euros. For this category of households, INSEE does not systematically communicate net wealth, but gross wealth. The latter corresponds to the total amount of assets held by a household (whether real estate, financial or professional), without deducting the amount of capital that it still owes for the loans it has taken out.
Even in this wealth class, such a household is more fortunate than the richest 10%, the latter having at least 549,600 euros in net wealth. It is even easier than the 5% best endowed, the latter having a net wealth of 794,800 euros at least. However, it remains worse off than the richest 1%, who have a net wealth of at least 1,745,800 euros. This wealth of 1.3 million euros places its holder among the 3% of households with the most money, those with an average gross wealth of 1,260,000 euros.
The case taken as an example by Eric Zemmour, based on taxable real estate assets consisting of a single Parisian apartment of 1.3 million euros, appears to be poorly representative of the asset situation of these very well-off households. The wealth of the richest 10% of households is not in fact made up 100% of real estate. Quite the contrary. Among “households with high wealth”, real estate accounts for half of the fortune (51%), ahead of financial assets (24%) and professional (19%), according to INSEE.
The more the taxable real estate assets of a household taxed on the real estate assets, the less the part of its main residence is important. For households with an IFI of between 1.3 and 2.5 million euros, the main residence represents on average nearly a third of the declared assets. But for households with assets exceeding 10 million euros, the main residence only accounts for 6% on average of the real estate assets, according to the figures given by the General Directorate of Public Finances in its note on the IFI in 2020 (dated July 2021).
One question remains: how many taxpayers have sufficient real estate assets to be subject to the IFI? By becoming liable for this tax, we are joining a very closed circle of 143,337 tax households in 2020, out of a total of 39.3 million tax households, according to the DGFIP. Of these, around 65,000 households (or around 45%) have taxable property assets of between 1.3 and 1.8 million euros, which is comparable to that of the case cited by Eric Zemmour. The others having a higher real estate fortune. “On average, the amount of the IFI amounts to less than 11,000 euros per household, or 0.4% of the average taxable real estate assets of declarants”, specifies the DGFIP. Corn “more than half of households with taxable real estate assets of less than 1.8 million euros are liable for an amount less than 4000 euros”.