My in-laws (Flo’s parents - French) own an apartment that is rented out permanently. Flo’s father is now in a hospice and has no idea of what is happening in his life (dementia) and her mother is heading the same way at a seemingly rapid pace.
My query - and I probably know that we will have to visit a Notaire for the full answer - is :
Would it be better / more tax efficient for the apartment to be sold as soon as possible and the monies deposited within the parents bank account or wait until the inevitable happens and then sell the apartment? As you can probably gather, neither Flo nor her brother are interested in keeping it.
Just wondered if anyone had any similar experiences or situations.
Well if its like the UK and money is in an account over a certain ceiling, the authorities will probably demand it for payment for care home/hospice care if their pensions do not cover costs. See a professional is my opinion as you can get badly stung.
If they are not 100% with it most notaires would refuse to take action unless you had legal rights over their financial affaires (tutelle), or they were sufficiently alert to be able to convince a notaire.
In terms of finances - even paying for care homes - I think it amounts to the same thing. Just might be faster if already in cash.
Paying for their care isnt the issue - they both have extremely good mutuelles and pensions : these can more than cover the costs.
It is the tax liabilities (if there are any) - the difference between selling now whilst they are alive and selling after they are gone.
Father in law is beyond rational thought (I am not being unkind I promise) but mother in law is in denial about her deteriorating condition and would argue that there is nothing wrong with her - whereas the evidence shows the contrary.
I am not aware of any difference in tax on inheritance depending in whether the asset is a house or bank balance. And the process you will have to go through to sell the house now will be pretty complicated, for perhaps a small gain in administration time later.
Any decent estate agent and notaire will refuse to even place this on the market without legal authority to do so, let alone finalise a sale. So lots of legal steps to take first. Doable, but will require work.
The inheritance tax free thresholds in France are very low - max €100k for a child- and the rate of tax can be high. If a lot of money over €100k then can be taxed up to 45%.
Indeed Jane, My rather oblique point was are there CGT tax implications for the parents on the sale and/or just CAT implications for the inheritors on succession.
The advantage of cash over property is it’s mobile.
Anyway your point made me realise this is a rented property, which changes things slightly.
Being able to sell a rented property is very slow as one has to give notice according to strict timetable. So one can only give notice 6 months before the lease end date fir furnished property, and 3 months for unfurnished. No doubt Flo knows this as she is French.
Or one could sell with a sitting tenant, but drops price and reduces market interest.
But to give notice also requires the legal authority to do so. If FIL is still in sound enough mind could give a procuration to his wife. But if she is also “compromised” that may be challenged.
So practically if the inheritors don’t want the flat then best to go to a judge with all the medical documents to ask for authority to give notice and then sell. Or they could have it on their hands for some time!