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Thegonnec
Thegonnec, Judge
Category: French Law
Satisfied Customers: 1412
Experience:  11 years experience as judge at Paris Industrial Tribunal
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I own a property in Bordeaux with my wife value €280,000.

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I own a property in Bordeaux with my wife value €280,000. No mortgage. My mother lives in the house and I regard it as her house. It was initially naught with a deposit paid by my parents of £80,000 and I raised a mortgage for rest. When they sold their UK house they gave me the money to pay off the mortgage. The French property was only put in my name because I had income to justify the mortgage. We have signed a nominee form in the UK (not recognised in France) in which we confirm that we only hold it as nominee for my mother. I want to gift legal ownership to my sister with my mothers consent but the French lawyer that I have insists this is illegal. I woul have to give money (i do not have) to my mother to then be given to my sister to enable her to buy it off me (and wife) and then pay the transfer fees and legal fees to avoid money laundering and inheritance issues in France.......... What should I do to transfer this most efficiently. Russell XXXXXXXX

Submitted: 3 years ago.
Category: French Law
Expert:  Thegonnec replied 3 years ago.
I am afraid your lawyer has detailed it pretty well.

You cannot donate the ownership directly to your sister for free. From what you describe you only own 64% of this house (80 K€ donated by your parents + 1/2 of the rest) the remaining is your wife's part of the matrimonial asset. If your wife and yourself give this to your sister directly she would have about 141K€ donation tax to pay + transfer fees and legal fees... Indeed your gist to your sister would be taxed at 45% of its value, and your wife's gift on her share at 60%...
Doing what your lawyer suggest would eliminate some of the tax but not all (donations between mother and sons and daughters are exempted up to 100K€)
Customer: replied 3 years ago.
In French legal system me and my wife own the property. But money was loaned to us by my mother. I am only involved in the purchase because I had income to justify the loan whilst my parents house was being sold.

In English law(probably irrelevant) I we own it as nominees (a concept not recognised in France)

Is my mother able to buy property off us without me repaying her the actual money (which I don't have!!). The property has not increased in value.

In buying the property off me can my mother pass half to my sister(and her husband)


My sister and her husband intend to move in with my mother. Is that relevant?
Customer: replied 3 years ago.
Have you seen my request for clarification?. Want to rate reply when that is done.
Expert:  Thegonnec replied 3 years ago.
Only French law is applicable to the matter. And as far as French law is concerned your wife and yourself are the legal owners of the property. There is no way the ownership can be transferred to your sister without paying rather huge sums being paid in tax.
If your mother buys you out without paying fair market price, she would be taxed likewise.
That your sister and your husband intend to move with your mother does not affect the situation. What you can do is somewhat minimize the amount of tax due.
Customer: replied 3 years ago.
The only bit not answered is - do I have to loan real cash to repay my mother back the money she paid me to enable her to buy the property off me?
It seems an unnecessary expense to do that.
Would it help for my wife to give me her share first?
I will confirm all answered if you can clarify this.

Russell
Expert:  Thegonnec replied 3 years ago.

Actually if you have no pre-nuptial agreement, your wife cannot donate you her share. And yes, if you want to avoid taxes: you mother has to buy the house from your wife and yourself (with money borrowed from you or someone else). Then she can donate it to your sister, with 100000 € tax free and the rest subject to progressive gift tax. If your mother dies in France you need be aware that the donation will be recouped into your mother's estate. And you sister may end owing you (let's say if your mother has no other assets worth more than the house). Likewise, if you loan money to your mother and this money is not repaid at the time she passes away, you sister will be legally liable to repay half of it to you.... Unless you renounce all rights to your mother's estate at that time.

The bottom of the matter is that, as the house legally belongs to your wife and yourself, there is legally no way it can be gifted to your sister, directly or indirectly, without paying rather hefty taxes.

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