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EVERYTHING YOU NEED TO KNOW ABOUT THE DONATION OF REAL ESTATE WITH USUFRUCT RESERVE
The donation of a property with reservation of usufruct
In the previous Petit Immo, we announced ways to optimize the transmission to his children. Indeed, you could consider passing on a property to your children by reserving the usufruct. How does it work?
It is a question of giving away a property while retaining until your death the right to use the property and rent it.
We are talking about dismemberment of property. The prerogatives of the right of ownership are distributed as follows: on the one hand, the donees who will be bare owners. They will have the right to dispose of the property (sell it or give it away). Bare owners will not assume any maintenance expenses except for major repairs. on the other side, the donor who will be usufructuary. He will have the right to use the property or to collect the rents. In return, he will assume all maintenance costs except major repairs. He will also be responsible for property taxes.
Everyone has the right to dispose of his right but within the limits of it. Thus the bare owner will only be able to sell the bare ownership alone. He will need the agreement of the usufructuary to sell the full ownership.
What's the point?
This technique makes it possible to gradually organize the transmission to your children without completely stripping yourself and while simplifying the settlement of your estate. Indeed, on the death of the donor, the usufruct is extinguished in favor of the donee who then becomes full owner, without formality to perform.
This also has a tax interest. Indeed, gift taxes are calculated solely on the value of the bare ownership. On the day of your death, your usufruct will be extinguished without the tax authorities considering that it is a new taxable transfer of ownership. As a result, part of the value of the property will never be taxed and if the gift was made more than 15 years ago, a new tax allowance will be available for the estate. The value of your usufruct is calculated according to a tax scale that takes into account the age of the usufructuary. If you are between 51 and 60 years old, it is 50% of the value of the property in full ownership; between 61 and 70 years, by 40%, and so on.
How best to frame the conditions of this donation?
It is possible in the deed of gift to provide for certain clauses that will best organize the relationship between the donor and the donee. In particular, you can provide that major repairs will remain the responsibility of the usufructuary donor. As a result, the donee will have nothing to spend for the duration of the usufruct. You can prohibit the donee from alienating and hypothecating the property. This means that he will not be able to give, sell or pledge the property during the life of the donor, unless he obtains your agreement. You may provide that the property must remain the donee's own property. In the event of the donee's marriage, the property will remain excluded from the community unless you agree. He may also be excluded from the pacsimonial indivision.
What are the disadvantages?
The donation is an irrevocable act. It requires a global reflection on your heritage. For example, if you donate your main residence, you will no longer be able to sell it without their agreement. The sale price must then be divided between donee and donor according to the value of your usufruct, and this will be calculated according to your age on the day of the sale.
