Less common than cash donations, temporary donations of usufruct are a powerful tool foroptimization fiscale To reduce your wealth tax (IFI), by opting for a temporary usufruct donation (DTU) in favor of the Pasteur Institute of Lille, you actively support medical research and advance medicine, while also benefiting from a significant tax advantage. To help you better understand this opportunity and its terms, discover what a temporary usufruct donation means, how to proceed, and what benefits it offers your assets.
What is a temporary donation of usufruct?
The Real Estate Wealth Tax (IFI) applies only to real estate assets and rights. These can be held in full ownership or through a dismemberment of propertyIn this second case, the rights are shared between the bare owner (who retains the right to sell the property) and the usufructuary (who has the right to use it or collect the income from it).
In accordance with the provisions of Tax CodeIt is the usufructuary, and not the bare owner, who to declare la full ownership value of the asset in its real estate portfolio.
Usufruct is defined as the right of use and the enjoyment of property that one does not own. In practical terms, the transfer of usufruct allows the beneficiary to receive the income generated by the property, such as property income (rents) from an apartment or even shares of SCPIThese revenues are then subject to social contributions in the name of the beneficiary.
The beneficiary of the donation can be an individual, but it can also be a legal entity, particularly a recognized public-benefit foundation such as the Pasteur Institute of Lille. This approach is often part of a broader strategy of transmission of heritage.
It is important to distinguish temporary usufruct, granted for a fixed period, fromlife usufruct, which generally ends upon the death of the usufructuary and is often encountered in the context of droits of succession for the surviving spouse.
How to make a temporary donation of usufruct?
For the temporary donation of usufruct to be recognized by the tax authorities and allow you to reduce your IFIIt must meet certain specific conditions:
- The organization receiving the donation, such as the Pasteur Institute of Lille, must be a foundation or an association recognized as being of public utility.
- The donation must be formalized by a deed of donation, which must be drawn up by a notary.
- The temporary donation of usufruct must be granted for a minimum period of 3 years.
- The donation must have a real benefit for the donee's business, whether financial (receipt of income) or material (provision of premises).
In practice, the law specifies the duties of the usufructuary. Beyond collecting the income, they must manage the property and ensure its upkeep by carrying out maintenance repairs. major repairs, as defined by the Civil Code, remain the responsibility of the bare owner.
Temporary donation of usufruct and tax advantages on the IFI
While a cash gift entitles the donor to a tax reduction, a temporary donation of usufruct directly affects the taxable base of your real estate assets. By temporarily removing the value of the property or properties from your assets, you automatically reduce your tax, or even eliminate it.
The IFI (French wealth tax) threshold is set at €1,3 million. If a temporary donation of usufruct reduces the value of your net taxable real estate assets below this threshold, you are fully exempt from IFI for the entire duration of the donation.
At the end of the agreed period, theextinction of the usufruct This is done automatically and without any taxation. You then regain full ownership of the property in a simple and transparent manner.
Example of tax advantages through the temporary donation of usufruct
Let's take the example of a taxpayer subject to the IFI, Mr. R., whose net taxable real estate assets amount to 2 million euros. As such, he must pay 7,400 euros in IFI.
- Case A: Reduction of the French Wealth Tax (IFI) To support a cause close to his heart, Mr. R. grants the Pasteur Institute of Lille the usufruct of one of his apartments, valued at €500,000, for a period of 3 years. During this period, he will declare assets of €1,5 million (€2,000,000 - €500,000). His IFI will therefore be reduced from €7,400 to €3,900.
- Case B: Total Exemption from Wealth Tax (IFI) Mr. R. chooses to give away the usufruct of two of his apartments, for a total value of €800,000. The value of his assets is therefore reduced to €1,2 million (€2,000,000 – €800,000). Falling below the €1,3 million threshold, Mr. R. is no longer liable for Wealth Tax (IFI).
Making a donation to the Pasteur Institute of Lille through your IFI (French wealth tax) provides valuable support to medical research and contributes to the fight against disease, while significantly reducing the amount of your tax.
