Expats who own property in France and have plans to bequeath it to friends or family in their last will and testament have been warned that planned tax changes in France could entail that people who inherit their property will face much higher tax bills if a new government comes to power during the next election.
Many expats move to France and love the country so much that they choose to buy property there. However, while France may represent a good investment opportunity, things may turn slightly more complicated when it comes to tax inheritance laws, especially for those intending on leaving their properties to their children.
At present, France operates an inheritance law that states that each person has an individual tax-free allowance. This allowance differs according to the relationship that they have with the deceased. Experts predict that, a new French government comes into power after the imminent election, a new budget will be pushed through and this budget is highly likely to include significant changes to the inheritance tax rates.
Under the current rules, those that inherit French property face tax rates that range between zero and 60 per cent. Children of the deceased parents enjoy a tax-free allowance of up to 160,000. However, according to many advisors, a new government could drastically reduce this tax-free allowance by up to two-thirds, meaning that there new allowance would be just 20 per cent.
Expats who own property in France are being advised to seek independent advice on managing their own personal circumstances and attempting to reduce any inheritance tax that will impact their friends and relatives.