The notion of "market value" and the "Patrim" tool:

For the establishment and calculation of the IFI, Real Estate Wealth Tax, the value of the real estate to be declared is the market value determined on the date of January 1; said market value is that of the real estate market, it is, i.e., the price that would be obtained from the sale of the property in question by putting it up for sale. 

This reminder of the market value of real estate, as well as methods of valuation of these, including the Patrim tool, put forward by Bercy and made available to individuals by the tax administration to facilitate the procedures declarants and allow them to make the most accurate assessment of their assets, without having to call on an expert, is not useless.

The market value of the building and the allowances to be applied:

It will be recalled that a reduction of 30% on the market value of the building constituting the principal residence of the declarant can and must be systematically calculated. About other facilities, whether they represent a second home or even goods rented out, it is possible to apply a highly variable reduction on their respective market value, which can range from 5% to … 40% depending on the situation. 

However, it is advisable to be careful with reductions!

A 20% to 30% reduction is difficult to dispute if a building is in SCI, for example, and if it is in the hands of several partners who share the powers. The same is true for jointly owned housing, for which a 20% discount may be considered, in cases where the taxpayer's leeway to sell his undivided share is really reduced, as may be the case for a well-dismembered, if it is in the hands of many co-divisors, or as may be the case if the taxpayer does not get along at all with his co-divisors. 

Similarly, a critical judgment of the Administrative Court of Appeal came to shake the assurance of the tax authorities in terms of market value assessment, being questioned for the circumstance of a building given in rent! It was a real estate complex (trade + housing) located in the Paris suburbs, for which the tax authorities had suspected an insufficiency (or undervaluation). He had therefore notified an upwardly revised assessment, which, however, took into account a reduction of 20% on the only part of the market value, thus estimated corresponding to the commercial premises, knowing that there was only one tenant in this set, trade, and apartment. 

Not having heard it that way, the owner had first seized the administrative court, which had dismissed his case. He had taken the Administrative Court of Appeal of Rouen, which, in its judgment dated June 10, 2015 (n° 14-04087), considered that the tax authorities had been wrong and that they should also have applied a 20% reduction on the part of the market value corresponding to the accommodation, given that the apartment was only rented to one tenant! 

The judges, therefore, recalled the importance of a deduction to be submitted to the calculated market value of a property when it is rented out, and they considered that the conclusion should be all the more significant as there was only one tenant! 

Beware of excessive discounts!

However, it is advisable to pay attention to abusive reductions in the market value of buildings! Indeed, the Court of Cassation, in a judgment of September 30, 2020, reduced from 20% to 5% a discount applied to a property for the calculation of the gift duties of a dwelling held in joint ownership, on the sole ground that he building concerned was in "simple joint possession" between a mother and her child, in a situation that therefore did not a priori present any major obstacle to the project of a possible sale!