Can you purchase a house in one name, and later on add your children as co-owners?

[nectarine]

Hi, a query on behalf of a friend.  He is shortly buying a maison secondaire and he has two children and would like to ensure that they inherit this property in the future without paying any taxes.  Firstly, what is the inheritance tax allowance on a maison secondaire - is the tax payable on the value of the property (above a certain limit, like in England) or does each beneficiary receive an allowance for themselves?  Can anyone point me to the tax scales that could answer this, please?

If he buys only in his own name, can he later add on the children as co-owners - either by adding them to the deeds or making a donation of one-third of the property to each of them?   If so, are there any conditions attached to making a gift of (part of) a property to one's children?  What are the costs, if any, of making a gift to the children - do you just inform the notaire?

I know that this information can be got from the notaire but, before approaching him, I wanted any advice or information that the Forum raders may be able to provide.

Any information that you have will be most gratefully received.  Many thanks in advance.

 

[Nick Trollope]

Hmmm...

If their situation is as simple as you describe, then they will inherit the property anyway - little can be done to avoid that. Avoiding taxes is another matter - broadly speaking, you can't.

There are allowances for "death duties", but they are very low - much lower than the UK - I'm not sure of the figure, but it is around 70K€ - on the property, not the beneficiaries.

You cannot give a property to anyone without paying tax - assessed on the market value of the share at the time of transfer by the Notaire. This is the same tax as one pays when buying the property in the first place, so he could end up paying 3 times.

As for putting he chiildren on the "deeds" (not that they exist in France), it too could have unfortunate tax implications - for example, if one of the kids died before his/her father, then the his/her sibling would get the lot (and the taxes).

Death and taxes.... See a Notaire!

 

[johndalton36]

Get advice on buying the property through an offshore IBC - you can then transfer the shares of nominal face value to anyone you choose, or even have bearer shares.

The difficulty though will be finding a Notaire that understands the process. Most will tell you you need to form a French SCI property ownership company which is not the case at all.

[Nick Trollope]

How would that work?

It is the transfer of the ownership of the property (in the case of any share-issuing organism, the shares), that incurs the taxes. Notional or nominal values are meaningless, becuase the Notaire bases the taxes on a market value, if it is obvious that the transfer is being done to avoid taxation - this is the law.

An offshore company is no different (in French eyes) to any other asset - and is taxed accordingly.

Where do you get your info, John?

 

[Will]

If you are French resident, property situated on French soil is treated as property, whether it is straightforward bricks and mortar or hidden in shares.

You can sometimes get away with such dodges if you are tax domiciled elsewhere and have a clever adviser.

[jc]

If you add other people to the ownership(family or not) they must be seen as owners-IE.part share of all bills and proof of this and it must be done properly thro' a notaire.We went into this because of IHT both in France and the UK and CGT both in France and the UK.