Four ways to transfer property
Anticipating the transmission of ownership of one or more of your properties to your loved ones allows you to share out your assets as you see fit. Here are four possible scenarios.
Protecting your family and loved ones involves organising the transfer of ownership of your assets in advance and dividing your properties while you are still alive. Why should you do this before you die? Without any special provisions, it is French law which will decide on the share received by each of your estate’s beneficiaries on your death. Here are the four possible scenarios. Please note that gifts are irrevocable and irreversible acts. This is why it is important to avoid running the risk of impoverishment too early on.
* Simple gift
Performed before a solicitor, this legal provision involves transferring, the ownership of a property to another beneficiary (child, etc.), free of charge and during your lifetime.
If the giver owns several properties, they may decide to transfer one to each child at equal value. If we remain within the limits of authorised allowances (i.e. €100,000 per parent per child every 15 years), there is no gift tax to be paid.
* Inter vivos gift
This is another way to give and divide all or part of your assets to or between your heirs. This measure has the major advantage of avoiding gifted property from being re-evaluated when the giver dies. Its principle characteristic is to fix the value of the property on the day of the gift. As a result, this act is not challenged when the giver’s estate is opened, which could be the case for a simple gift. For the recipient (the one receiving), this is an opportunity to immediately and definitively acquire property assets. This type of gift may be made to children and grandchildren.
* Temporary division of property
This is another type of gift. It involves temporarily (usually 8-10 years) separating the usufruct of a property from the bare ownership. The owner may decide to retain bare ownership and transfer the usufruct to their child who may enjoy the property at will, i.e. either live in it or collect rental income from it. This type of division is interesting for the parent and bare owner as a property held in bare ownership is not included in the assets liable for Wealth Tax. At the end of the period of division, full ownership is restored to the original owner without any fees being charged.
* Creating an SCI (Non Trading Real Estate Company)
This legal structure facilitates and organises the transfer and ownership of an asset over the long-term. This is a way to avoid the regime of joint ownership and to keep a property in the family. However, creating an SCI is complicated. and you should consider writing Articles of Association and plan suitable exit scenarios (in case of death or the sale of shares). The SCI’s operating procedures and incorporation documents are prepared by a solicitor and cost between €2,000 and €4,000.