2025: A year to seize for organizing donations to your children?
A Tax Opportunity Not to Be Missed
The taxation of donations is a major concern for many taxpayers wishing to pass on their wealth to their children or grandchildren. With the adoption of the finance law for 2025, a temporary window of opportunity opens to optimize these transfers. Taking advantage of the existing provisions starting this year could help avoid potential tightening in the future.
A New Temporary Allowance for Cash Gifts
One of the key measures of the finance law for 2025 is the introduction of an exceptional allowance on certain cash gifts. This provision applies to donations made in full ownership between the day after the law is enacted and December 31, 2026.
Eligibility Conditions
The amounts transferred must be used within six months for:
- Purchasing or constructing a new home (including in VEFA - Sale in Future State of Completion).
- Financing energy renovation work on the beneficiary's primary residence.
The exempt amount is capped at:
- €100,000 per donor and per donee.
- €300,000 per donee in total.
This mechanism primarily targets parents and grandparents who wish to help their children acquire real estate or contribute to the energy transition of an existing home.
A Constraint: Retain the Property for Five Years
To prevent any tax abuse, the beneficiary must retain the acquired or renovated property for at least five years. They can either occupy it as their primary residence or rent it out to a third party (outside the tax household of the donee).
Permanent Provisions Still in Effect
In addition to this temporary allowance, it is possible to benefit from other tax exemptions for cash donations:
1. Exemption for family gifts (Article 790 G of the CGI) allows a parent to give up to €31,865 every 15 years, subject to age conditions (under 80 years for the donor).
2. Personal allowances on donations are also renewable every 15 years:
- €100,000 per child.
- €31,865 per grandchild.
- €7,967 per nephew or niece.
These various mechanisms can be combined, allowing for a gradual transfer of wealth with a reduced tax impact.
A Wealth Optimization Strategy: Property Dismemberment
One of the most effective methods for optimizing a donation is property dismemberment. This involves transferring the bare ownership of a property while retaining the usufruct, which is the right to use or rent it out.
The benefit? Reduce the taxable base during the transfer. For example, if a parent gives the bare ownership of a property worth €200,000, and the usufruct is valued at 50% of the total value, only €100,000 will be taxed. This amount can be covered by existing allowances, allowing the donation to be exempt from transfer taxes.
Why is 2025 a Key Year?
The tax climate remains uncertain, and several political signals suggest a possible tightening of inheritance taxation after 2025. Many experts therefore recommend anticipating transfers now to benefit from the favorable conditions currently in place.
Anticipating a donation today not only allows for reducing taxes but also helps your children before an inheritance, avoiding the highest tax brackets.
Conclusion: Act Now to Secure Your Transfer
The year 2025 offers a unique opportunity to optimize the transfer of your wealth through enhanced exemptions and allowances. Taking advantage of the mechanisms in place now can help ensure a tax-optimized transfer and anticipate potential less favorable legislative changes.
Need to anticipate the consequences of this new tax regime? Contact PRAX Avocats for tailored support in donations and wealth transfers.