Passing real estate while living is a good way to help his heirs and give them tax benefits on inheritance and gift taxes. Between the donation of the full property or the bare ownership of the property, you choose the one that suits you best.
Why donate a property?
Making a donation allows the donor to pass on his wealth during his lifetime to avoid conflict and misappropriation of inheritance at the time of succession. It is also a good way to enjoy interesting tax benefits. In the event of a donation, the beneficiary is exempt from inheritance tax and may in some cases benefit from tax relief.
Transmit real estate while alive it's also an opportunity to help financially your heirs in advance or favor one of them.
How to donate your property?
There are different ways to leave a property:
- The donation shares: it is done with the agreement of the heirs. She allows to bequeath a real estater between the heirs of fair way. It is possible to leave the property in full ownership or to surrender only the bare ownership while keeping for you the usufruct (possibility of enjoying the property). After the donation, the heirs own property in joint ownership.
- Donation with usufruct reserve: this type of donation has the advantage of protect the donor and allows the beneficiary to enjoy attractive tax benefits. Indeed, thanks to the donation with usufruct reserve, the donor bequeaths the bare ownership to his heirs while reserving the right to enjoy the property by occupying it or by collecting the income (the usufruct). The beneficiary do not pay any inheritance tax and only pays gift taxes on the value of the bare ownership and not on the entire value of the property. After the death of the donor, the usufruct joins the bare property in the heritage of the donee.
- Precious donation: this type of donation is considered to be outside the estate. It is thus added to the share of reserve of the heirs when it is done for the benefit of the heirs. Be aware that if the donation is for the benefit of an heir only, the value of the property can not exceed the value of the disposable portion of the donor at the risk of seeing other heirs apply for a reduction action.