Effect of donation-partage on CGT in France
Some time before a UK resident sells a holiday home in France they may have made a donation-partage to their children (a legal procedure, sharing property among one’s children in one’s lifetime; for example giving them a legal right to a house, while retaining lifetime use). In some scenarios this might later have been revoked. How does this affect French capital gains tax and social taxes when it is sold? W.O.
If the donation-partage is still in force, it is the children who own the property and they will be taxed on capital gain from the date the donation-partage was made until the date of the sale.
If the donation-partage is revoked, then the capital gain is from when the donation-partage was revoked until the date of the sale and would presumably be the liability of the parents.
Whether the owners are the children or the parents, abatements will be allowed, which are (for CGT), 0% for years one to five, 6% per annum for years six to 21, and 4% for the 22nd year, and for social charges 0% for years one to five, 1.65% per annum for years six to 21, 1.6% for the 22nd year and 9% per annum for years 22 to 30.
Reader's query answered by Hugh MacDonald
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