Gifting assets in your lifetime can be a good way to minimise inheritance tax for your beneficiaries. If you gift a French property, or you make any gifts and you are resident in France, it is imperative you are fully aware of both the French and UK tax consequences. A solution a French Notaire gives might not be attractive from a UK perspective.
There can be an immediate charge to tax on a gift under French law. The tax is charged on the beneficiary, so he may not thank you for giving him a tax bill.
It is important you receive the right legal and tax advice for both systems in France and the UK.
The option of retaining a life interest in a French property – known as an usufruit – and giving away, often to children, the bare or reversionary interest – known as the nue-propriété – is very common amongst the French. But this ownership structure can be fraught with complexities when UK tax law is applied to the gift.
A gift of a French property if you are UK resident can give rise to a UK capital gains tax charge, but unlike in this case of a sale, you would not have any sale proceeds to pay the tax charge.
We can help you through the legal and tax minefield. We will consider what you want to achieve by making a gift to advise on your options. We will explain how the gifting process works in France and what the tax consequences in France and the UK will be.
We will liaise with a Notaire in France in the drafting of a deed of gift and help you through the whole process.
We have experience in this type of French estate planning. Our team comprises both French and UK tax advisers.