🏛️ Taxation and assistance for inherited homes:
Inheritance, Value and Strategy.

Taxation and assistance for inherited properties

Inheriting an exceptional property, listed or registered as a Historic Monument, can be as prestigious as it is costly. Fortunately, the French tax system offers several relief and support mechanisms for owners of remarkable architectural heritage. Whether through partial exemptions from inheritance tax, public subsidies, or tax advantages for renovations, it is possible to combine inheritance, appreciation, and preservation.

Inheritance taxes: an unavoidable step

Following a death, the heirs must pay inheritance tax, calculated on the net value of the inherited property, after deduction of any debts. For unclassified assets, the taxation follows the standard rules mentioned previously.

However, for historical monuments or properties listed in the supplementary inventory, exemptions or reductions are possible, subject to conditions:

• Signing of an agreement with the State committing the owner to preserve, maintain and partially open the property to the public

• Presentation of a management plan and tourism

• Part of the property must be open annually for at least 50 days (including 25 public holidays or in July/August), or 40 days for the gardens

This exemption can reach 100% of transfer taxes, particularly in the case of transmission in direct line, in an undivided framework or via a family company.

Income tax reduction for historical monuments

Owners of historical monuments can benefit from a full deduction of the work and expenses incurred for the maintenance, restoration and management of the property:

• No ceiling

• Whether it is a rented or occupied property

• Including if the revenue generated is less than the expenses

Deductible expenses include:

• Roofing work, masonry, carpentry, etc.

• Architect's fees

• Insurance, property taxes, security or routine maintenance costs

• Loan interest related to the work

The entire amount can be deducted from total income, which constitutes a major tax advantage.

Subsidies and public funding: DRAC (Regional Directorate of Cultural Affairs), local authorities and foundations

The Regional Directorate of Cultural Affairs (DRAC) may grant subsidies for restoration work on listed or registered properties. The subsidy rate varies according to the importance of the property, the nature of the work, and the level of protection:

• Up to 40% of the cost of renovations for a listed property

• Up to 20% for a registered property

• Additional aid may be granted by the region, the department or the municipality

The Heritage Foundation, for its part, can grant aid for buildings that are not officially protected but have architectural or historical value. It offers:

• subsidies Direct

• A label that entitles you to a tax deduction, even for individuals

• to Crowdfunding campaigns raise funds

Focus on the work: what are the tax advantages?

Even outside the Historic Monuments scheme, certain renovation expenses may benefit from advantageous schemes:

• Deduction of expenses (loan interest, renovations, management fees) in the case of furnished or unfurnished rentals

• A flat-rate deduction of 50 to 71% is available for furnished seasonal rentals (micro-BIC regime).

• Energy transition tax credit (CITE) for certain energy-saving works, if the property is occupied personally

• Reduced VAT rate (5.5% or 10%) for certain renovation work

It is recommended to seek guidance from a chartered accountant specializing in wealth management, a notary, or a preservation association to structure a coherent and tax-optimized project.

Planning for the transfer of an exceptional property: strategies and wealth management tools

Passing on a prestigious property is not simply about bequeathing ownership; it's about preserving a family, cultural, and sometimes historical legacy. To avoid conflicts, minimize inheritance taxes, and ensure continuity of management, several estate planning strategies can help best prepare for succession.

The gift-sharing arrangement: transferring assets fairly during one's lifetime

A gift-partition is a key tool for planning the transfer of real estate to one's children or heirs. It offers several advantages:

• It fixes the value of the asset on the day of the donation (even if it increases in value subsequently)

• It allows for the equitable distribution of assets among the heirs, with their agreement

• It avoids subsequent conflicts related to inheritance distributions

It is possible to make a gift-partition with reservation ofusufruct, which allows the donor to continue to live in or rent the property while transferring the bare ownership.

The family SCI: managing and transferring with flexibility

A French real estate company (SCI) is a frequently adopted solution for structuring the ownership and transfer of exceptional properties. It notably allows for:

• To gradually transfer shares to heirs through gifts, sometimes with allowances renewable every 15 years

• To avoid joint ownership, a source of deadlock and conflict

• To organize the management of the property through clear statutes (appointment of the manager, sales rules, allocation of profits, etc.)

The SCI also facilitates the integration of the extended family into the management of assets, while retaining centralized decision-making power.

Property division: a smart tax lever

Widely used in the context of donations, the division of ownership consists of separating:

• Usufructthe right to live in or rent out the property

• Bare ownership : the right to become the full owner upon the termination of the usufruct (often upon the death of the donor)

This mechanism reduces the taxable base at the time of the donation, because only the bare ownership is valued, according to a tax scale linked to the age of the usufructuary.

This is a very advantageous tax strategy, while ensuring the continuity of the use and management of the asset.

Organizing family governance: pact, statutes, charter

Beyond legal tools, families who own prestigious real estate have every interest in formalizing family governance :

• Shareholders' agreement (in the case of a SCI) to govern important decisions

• Family charter to establish the principles for the preservation, management, rental or sale of the property

• Future protection mandate to anticipate the loss of autonomy of a manager

This approach helps to preserve harmony between heirs, to ensure the preservation of the heritage over time, and to integrate new generations into management in a gradual way.

Hire heritage professionals

Implementing these strategies requires the involvement of qualified professionals:

• Notaries specializing in inheritance law

• Wealth management advisors

• Tax lawyers

• Luxury real estate experts

They will help you optimize the legal, fiscal and human aspects of transferring your property.