Hi I am french by marriage and live permanently in france. I want to gift my house as a don to my niece and nephew who live in england. Is this possible? If so what costs are involved?
Thankyou
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It’s possible, but do you want to retain the right to live in it (ie keep the usufruit ) or just hand it over.
There would be a massive tax bill, as there is only €7k per person tax free and after than it’s 55%.
It would be kept as usufruit so I could stay there. The property could be given to my niece and nephew. Why and when would we be charged taxes?
Theoretically at least, yes, it is possible, however there is a differentiated tax credit table applicable dependent on the value of the property and the degree of the relationship (spouse, ascendent, descendent, etc) :
Donations par acte notarié |impots.gouv.fr.
The article here isn’t exactly forthcoming on the mechanism or how the calculations of tax liabilities are carried out.
A better example of the costs involved is given here.
As I understand it, you donate a property of value X at the date of donation, on which taxation is due by you to the French state. When you die, the value of the property is re-evaluated, say X+20%, and that value is taken into account as the basis for any applicable tax liabilites against your nephew and niece under French taxation legislation, which may or may not be offset through the double taxation treaty between France and the UK (although from memory, most double taxation treaties only deal with income and not property, so you would need to get your niece and nephew to check what their tax liabilities might be in the UK). Naturally, this also presumes that you are fiscally resident in France when you die.
Your hypothetical is a complex situation not generally covered in detail by articles to be found on the internet, so it would be better to use the services of a lawyer/tax advisor more familiar with such issues to avoid any surprises.
EDIT : the second article indicates that there are 2 main types of donation, and the moment at which the tax calculations are carried out differ. In a simple donation, the value of the property is reevaluated on your death, whereas if you use the “donation en démembrement”, the tax liabilities of the recipients are calculated at the time of donation.
I do know of one property in our village, which was actually owned by the daughters not the mum .
only found out in casual conversation with one daughter, who explained that they’d “bought the property” from mum some years previously but (of course) she continued to live there…
This would have been legally done through their Notaire… and might be a solution for you.
EDIT: Did you ever take legal advice as per another of your threads…
Lawyer marriage contracts, inheritance
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You will need to consider that they’ll be liable for Capital Gains Tax if you donate it whilst you’re alive, or Inheritance Tax if after you’ve died. There are ways you can minimise their tax liability (e.g. using a trust) so, as rice pudding and Stella say, you should take legal advice or consult a wealth management company.
As to why you would be charged taxes… Well, you wouldn’t. Your relatives would. It’s how governments earn money so they can function. I don’t like paying taxes but we all benefit from them.
I don’t think trusts in the UK sense work in France.
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Ricepudding has provided a couple of links. But the bottom line is that for nieces and nephews whichever way you do it there would be big tax liability in France. You need to check with them that this is fine with them as in general you have to pay the tax before the property can be put in their names.
Say for example you house was worth €114k . Between them they would have to find and pay €55.000, either now or on your death.
You need to talk to a notaire about the best way to do this to minimise tax. Maybe also ask about selling en viager, putting the proceeds into an assurance vie and making them the beneficiaries. Could work if you are under 70.
Can’t use a trust in France. The fisc views this as a potential tax avoidance, so makes it very, very hard and expensive and consequently not sensible.
For an indication of the taxation liabilities with regard to trusts, including if the trust involves donation of a property, see here.
Yes I think you’re right. However France and UK do, I believe, still have a tax treaty which allows a British citizen to specify in their will that they want their estate to be managed upon their death under UK taxation laws. But I am not a lawyer and so the best advice I can give is for Fiona to seek proper legal advice 
No, I agree. But in the UK you still can and (unless things have changed… Which is quite possible) Brits in France can state in their will to have UK inheritance law applied. But IANAL so don’t trust me on that 
Currently a little bit grey as there is a new law (nicknamed the sharia law) that has a potential impact. And for a property in France you cannot avoid the French tax regime…
(have put our property in the UK into a trust, only as the least worse option as not great at all)
Needs proper professional advice.
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Ah, that’s interesting. Wasn’t aware of that.
Obviously we’ve not been shouting it loud enough… 
Unless the niece and nephew are french residents, I don’t see anyway they can avoid french inheritance taxes after the initial allowance. When it comes to the time for the sucession to commence, they will have to decide whether to accept or not and if they do, be prepared for all debts and taxes that come with the property. The fisc here are pretty hot on tax avoidance and at death everything has to be valued as part of the inheritance so it may well come out at a lot more than the OP thinks (cars, jewellery, furniture etc)
How do they avoid it if theý are resident (bar the first €8k tax free)?
Unless its changed recently, heirs provided they lived in France could get an allowance of €150,000 each. My children were covered by this when their dad died. However, it maybe only be direct heirs and not heirs like this case who are not the children of the OP
I believe so, and nieces/nephews only get €8k each tax free.
But she should check with a professional.
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Sounds like viager if there aren’t restrictions on intra-family viagers.
Otherwise, depending on a few things like who’s got tax allowances unused, and the relative ages of everyone concerned, I might look at if the property at an independently assessed and documented fair value, could be transferred in chunks over a number of years to either the family members or to a vehicle controlled by family members, possibly as a sale rather than a gift.
The person still having use of the property might, as can be useful in the UK, even pay a rental charge back to the new owners, say annually, of a fair rent of the portion they no longer owned. If they were there long enough this might be helpful in all sorts of ways. And depending on all sorts of things, in time rents paid might come to balance the price received of each slice of the property transferred. That way tax allowances on either side could be used up each year with the aim of nothing to pay.
I know trusts won’t work as a vehicle to receive the property, for France as others have said, but I can think of one or two other vehicles if there’s a reason property should not be received/transferred directly.
This can only be done by a specialist professional though, rules can change over the years in either country. They’d have to help you be aware of the vulnerabilities of any solution eg annual CGT free allowance was suddenly much reduced last year in the UK - so if that happened later on, the size of chunk of the property you’d transfer year to year to each of them might ideally be able to be reduced etc. (if it was being sold, or possibly given to them bit by bit, instead of being transferred to a protective vehicle all upfront)
If you do find a solution, would you consider coming back and hinting at the rough shape of it?