1. Donation in Full Ownership of Luxury Villas
One efficient method to reduce your taxable estate is through the transfer of real estate assets such as luxury villas with a sea view to your children, grandchildren, or third parties. This significantly lowers the total value of your assets and offers substantial tax allowances—up to €100,000 per parent, per child every 15 years. Such donations not only decrease your wealth tax but also ensure your legacy of valuable properties is passed on.
2. Dismemberment of Ownership on Riviera Properties
Dismembering property ownership into usufruct and bare ownership can be particularly beneficial for luxury real estate owners on the French Riviera. The usufructuary has the right to use the property and receive income from it and must declare the asset's full value. However, investing in bare ownership allows one to invest in property without increasing real estate wealth tax, as the tax burden falls on the usufructuary. This method is suitable for high-value rental markets, offering tax relief and investment growth.
3. Real Estate Loans for Luxury Properties
Utilizing bank loans to acquire or renovate your luxury villa can also offer tax advantages. To qualify, the debt must exist as of January 1st of the tax year, be borne by a household member subject to wealth tax, and pertain to taxable assets. The outstanding amount of the loan is fully deductible from the wealth tax, providing a straightforward way to reduce your overall tax liability while upgrading your property.
4. Support Public Interests from Your French Riviera Home
Contributing to public interest organizations allows for both philanthropy and tax optimization. Donating from your luxury villa offers a 75% deduction on your tax liability, capped at €50,000 per year per tax household. These donations, effective since 2019, are also exempt from transfer taxes. By linking your investment in luxury real estate with charitable giving, you not only benefit financially but also support the community.
Navigating the complexities of the French real estate wealth tax requires careful planning and strategic actions. Property owners, especially those not residing in France, must remain diligent in their tax obligations to mitigate costly penalties and legal issues. Engaging with tax professionals can simplify this process, ensuring your investment in luxury real estate on the French Riviera is both profitable and secure.