Is it possible to transfer my apartment to my daughter in France?

Reader Question: Is it possible to transfer my apartment to my daughter and if so what are the pitfalls?

It is possible, and there are advantages, but the main ‘pitfall’ is that it will be a taxable gift: in France gift tax is similar to inheritance tax. 

Droits de donation would be payable at the time of passing on the gift, by your daughter or (if you choose) yourself.

A parent can give up to €100,000 to a child tax-free, after which tax applies to the value over this, at increasing bands (from 5% for the first €8,072 to 45% for any part over €1,805,677).

The full €100,000 allowance is reset every 15 years, however if you were to die within 15 years of making the gift and your daughter receives inheritance from you, the benefit of the allowance she already obtained on the gift will be taken off that for any inheritance.

If you opt to make this gift, it would have to be formalised by a deed in front of a notaire and there are notaire fees payable at a percentage of the property value (for example €2,393 on a property worth €150,000, with the overall rate being proportionately slightly lower on high-value properties compared to low-value ones).

An alternative option, which you could also discuss with a notaire, is gifting only the nue-propriété (residual ownership) while keeping the usufruit (lifetime ownership). 

Doing so reduces the value of the taxable gift.

If you have any other children, you should also consider the issue of obligatory inheritance portions for bloodline children under French inheritance law, as lifetime gifts are also taken into account with regard to these.