Do you want to help a loved one purchase a home? A monetary donation is a solution to assist them in achieving their real estate project. Indeed, nearly one in five French people has already received a donation during their lifetime.
Providing financial support to a relative for a real estate project is therefore a common practice, often to help one's child become a homeowner. In this article, discover the essential points to remember about monetary donations for a property purchase with Capifrance!
Is it possible to make a donation for a real estate purchase?
Provided for by Article 894 of the Civil Code, an inter vivos donation is a legal act by which a person (the donor) transfers ownership of a property free of charge to another person (the donee). In the context of a real estate purchase, this transfer most often involves a sum of money.
To be valid, the process must first meet certain conditions:
- The donor's legal capacity. The donor must be of legal age and of sound mind.
- The gratuitous nature of the donation. There must be no consideration in exchange for the gift.
- The express acceptance of the gift. The beneficiary must clearly express their agreement in writing.
Why make a donation for a real estate purchase?
A donation offers many advantages in the context of a real estate purchase:
- Increased personal contribution. The donee can more easily convince a bank.
- Access to more favorable interest rates.
- Flexibility in use. The sum can also be used for other purposes: notary fees, agency fees, security deposit, renovation work, or other expenses during the acquisition of a property.
What taxation applies in the case of a monetary donation for a property purchase?
Gift taxes represent a tax calculated based on the amount of money transferred. Their calculation depends on:
- The degree of kinship between the donor and the donee. The closer the relationship, the lower the taxes to be paid.
- The value of the donation. The scale is progressive. In the context of a monetary donation for a property purchase, the tax rate increases with the amount given.
To encourage donations between relatives, the law provides for a tax allowance on gift taxes. It is renewable every 15 years and applies to donations made during this period. The amount of the allowance varies according to the degree of kinship. It currently amounts to:
- €100,000 for a child.
- €31,865 for a grandchild.
- €80,724 for a spouse or PACS partner.
- €5,310 for a great-grandchild.
- €15,932 for a brother or sister.
- €7,967 for a niece or nephew.
An example in practice
A gift of €60,000 to one of your children for the purchase of their main residence will be entirely tax-free. You can then give them up to €40,000 under the same conditions over the next 15 years.
How to make a donation for the purchase of a property?
For movable assets like money, a simple "manual gift" between the donor and the donee may suffice. It must be declared in all cases, regardless of its amount. You can carry out this process:
- Online: From your "Personal Space" on impots.gouv.fr.
- Paper format: Download form No. 11278 "Declaration of manual gift and donation of sums of money." Fill it out and send it in duplicate to your departmental tax office.
On the other hand, the donation of a real estate property is a more complex legal act. It is always carried out by notarial deed. Thus, selling your house or apartment can be the ideal opportunity to make a monetary donation for the real estate purchase of the donee(s), especially when the children have grown up and you want to help them become homeowners.
Conclusion: A monetary donation allows you to strengthen a loved one's initial contribution in their real estate project
A monetary donation is a flexible tool if you wish to give a helping hand to a loved one who wants to buy their house or apartment. Do not hesitate to take advantage of the allowances provided by law to optimize this wealth transfer and anticipate your estate!
The 3 key points to remember:
- A donation is an effective tool to help a loved one access homeownership.
- It involves formalities, including a declaration followed by the possible payment of gift taxes.
- For a significant amount, it is recommended to consult a notary. You must ensure that you do not prejudice any of your heirs.
Do you wish to sell a property and make a monetary donation to a loved one for their current or future purchase project? Contact your local Capifrance advisor to carry out an accurate property valuation and conclude the sale at the right price, to the right buyer. Feel free to consult our real estate listings throughout France for the person you want to help realize their real estate project!
