Reduce your inheritance and donation costs

In France, the tax on inheritance represents almost 1% of tax revenue and 0.6% of gross domestic product (GDP), while the tax deduction is among the lowest in Europe. The transfer of a deceased’s patrimony to his heirs entails inheritance taxes, the amount of which will fluctuate according to both the value of the property or the money transferred and the family ties that unite the deceased to his heir, which in some cases can lead to depression; a number of criteria explaining the complexity of the calculation of this indirect tax… In order to reduce the cost of these inheritance rights, there are a number of tax options: gift during life, mutilation of property, real estate belonging to civil society.. .

The donation during life

Here is one of the first solutions to consider in order to reduce the inheritance rights of future heirs… The gift during life thus allows a spread of the inheritance, which can therefore be transferred in different installments. As with a “classic” inheritance, this type of gift is also subject to the payment of inheritance tax, but each beneficiary is then eligible for a renewable fee every fifteen years. This allowance varies according to the degree of kinship: 100,000 euros per child, 80,724 euros for the spouse or PACS partner, 31,865 euros for one of the grandchildren, 15,932 euros for a brother or sister and 5,310 euros for one of the children. the great-grandchildren. grandchildren. This tax advantage is all the more interesting if the donor sets up this donation process early in life, as he can repeat the operation several times. This allows him to spread his inheritance while taking advantage of the reduction. At the time of death, the portion of the inheritance that remains to be transferred is reduced, and the inheritance costs all the more. To be fully effective, this alternative requires extensive anticipation. Inheritance tax must initially be paid by the person receiving the gift (donor), but may also be borne by the donor. And if you can’t pay the inheritance tax, there are solutions to regularize your situation.

The breakup of properties

The gift for mutilation of property or the gift subject to usufruct is another possible solution for donors who own real estate. This operation consists in fact of establishing a separation between the bare ownership and the usufruct. In other words, the donor transfers the bare ownership of his property to his or her donees, while retaining the right to remain within the walls without owning them and to retain the income in the event of, for example, renting out the property. The mutilation of property is also subject to inheritance tax to be paid by the donee. However, the latter benefit from a reduction, as they are only calculated on the value of the bare ownership and not the full ownership. However, this right to bare property cannot exceed 50% of the value of the bare property. And on the other hand, it decreases with age. For example, the basis for calculating the inheritance tax will correspond to 20% of the value of the bare property if the donor is 30 years old at the time of the operation. It will be 70% if he makes this donation after 71 years. The more donation subject to usufruct is made when the donor is young, the less the right to the bare property will be high. Another advantage: the usufruct ends on the death of the donor and the donee then acquires full ownership of the property without paying additional costs or inheritance tax on the recovered usufruct.

Real Estate Management Civil Society SCI

As part of a succession, the SCI family has undeniable tax advantages. Real estate managed by a real estate company is divided into shares that are distributed among the partners. However, a partner may assign full ownership of its shares to its heir(s) and withdraw from the SCI. However, this type of donation is only possible if the company’s articles of association state the possibility of carrying out this operation. If this is not the case, the partners will have to give their agreement. The establishment of a civil real estate company has several advantages. In the first place, it allows an optimization of a succession thanks to the application of a reduction in the value of the inherited shares of the heritage. Subsequently, this system protects the surviving spouse or the PACS partner through the distribution of social shares; when the articles of incorporation provide for a tontine clause, it becomes the owner of the deceased’s shares.

(By the editors of the hREF agency)

Leave a Comment