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Giving the gift of property

Helping your child start out in life can involve giving them real estate. This property could become their principal residence or bring them rental income. This “gift” can be achieved in a variety of ways.

The theory

A property (apartment, house, piece of land) may be the subject of a gift. The law allows each parent to give to each of their children €100,000 every 15 years under the law on gifts. In this way, a couple may jointly give €200,000 to the same child without paying any tax. That’s around the price of a beautiful studio apartment in one of Paris’ Left Bank arrondisements.

Over €100,000, its necessary pay tax on the gift, plus there are the notaries fees associated with the drafting of the contract for the transfer of property. These expenses may be paid by the benefactor.

For a grandparent who wishes to do so, it’s also possible to give a similar gift in favour of a grandchild. The exemption ceiling is set at €31,865. However, in order to take advantage of this allowance the benefactor must be under 80 years old and the recipient must be of legal majority.

In favour of the shared-gift

A shared-gift is always preferable to a sole-gift. The former avoids family in-fighting and effects an equal and definitive split between the living children of the benefactor. In the latter scenario, everything may be called into question on the death of the parent benefactor, so a “new” division of the inheritance is undertaken. A brother may reclaim a share of the assets of which he feels he was deprived notably, if 10, 20, or 30 years earlier he did not receive the same amount as his sister.

New in 2015

The owner of a piece of land for construction who gives it to a relative benefits from an exceptional tax-free allowance under the law on gifts. This allowance increases to €100,000 if the gift is made to a forebear or a descendant, to €45,000 if made in favour of a brother or sister, and €35,000 to any other individual. On the condition that construction must be undertaken within 4 years of the gift.

The gift of a new, never occupied home affords the benefactor a tax exemption of €100,000 so long as there is a parent-child relationship with the recipient.