Parents warned on French property handover

Donating the freehold of a property to your children while you maintain use of it could be considered an abuse by the taxman from January 2020, a financial thinktank has warned .

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Cercle des fiscalistes says a provision in the 2019 Finance Act means that parents donating the nue-propriété while retaining usufruit (a life interest) could end up being heavily fined.

It hopes the new text will be struck out by the Conseil Constitutionnel.

Tax payable by offspring at the time of receiving a nue-propriété gift is lower than if inheriting the same property later, as the value of the gift takes into account the fact the beneficiary does not (yet) have full rights to it.

Up to now, the arrangement could legally be contested only if it was proved to be done exclusively for tax reduction reasons. The new text changes this to “principally for tax reasons”.