How to avoid inheritance tax on real estate?

Transferring real estate to your children or spouse can result in high fees, sometimes exceeding tens of thousands of euros. By anticipating through devices such as deductions, dismemberment, SCI or life insurance, it is possible to protect your assets and reduce taxation, while securing your loved ones.

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🏛️ Optimized transmission mechanisms

These devices help you to transfer your property in a gradual and advantageous manner, by reducing the rights for your children while securing your use.

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Gradual donation with allowances

When you give money or property to your children, the State allows an exemption of €100,000, renewable every fifteen years. This means that mom and dad can each donate €100,000, or €200,000, without paying fees. And fifteen years later, they can do it again. For a couple with two children, this makes it possible to transmit up to 400,000€ over two periods.

This method is simple to understand and apply, as it respects legal allowances without complicated formalities. (Source: impots.gouv.fr).

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Dismemberment of property (bare ownership/usufruct)

Dismemberment makes it possible to separate the use of the property (usufruct) from its pure ownership (bare ownership).

You keep the enjoyment or the rent, and your children become owners of the property. Depending on age, the tax authorities assess bare ownership between 60% and 90% of the total value of the property. For example, at age 65, the bare ownership of a €400,000 house represents approximately 60%, or €240,000. Inheritance taxes will therefore only relate to this restricted value. Upon death, your children automatically regain full ownership without additional rights. (Source: Public Service).

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Creation of a family SCI

The SCI allows you to own the property via a company and to transfer shares gradually. These shares are often valued at less than the real value of the property (discount of 10 to 15%), because they are less liquid. For example, a house sitting on €500,000 may be worth €425,000 in shares. By giving these shares to your children, you limit your fiscal rights and facilitate future management, because they benefit from a clear legal framework to decide together on the use or sale.

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🧩 Other complementary strategies

Beyond real estate arrangements, you have effective tax levers, such as life insurance, marital status or cash donations, to ease the succession.

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Life insurance

Life insurance is a smart savings product to transmit up to €152,500 per beneficiary without tax if the premiums are paid before the age of 70. This means that if a parent pays €300,000 on two contracts, each of their two children can benefit from this allowance. Amounts over €152,500 are taxed at 20% then 31.25% depending on the levels (Source: Nalo). This device makes it possible to clearly separate real estate assets and financial succession, while protecting your loved ones in a targeted manner.

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Pacs and universal community

To enter into a civil union or to marry under the regime of universal community offers total protection of the assets of the surviving spouse. In the event of death, all the common property, including real estate, goes to the partner without any rights to pay. It is a simple and effective solution to preserve the spouse's living environment while deferring potential taxation to future successions.

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Cash donation

Since 2025, it is possible to do a Manual donation of €31,865 to a descendant, renewable every fifteen years, without formalities or taxes. In addition, a family donation of €100,000 is exempt from duties as long as the money is used to buy or renovate a primary residence within six months. These donations can be accumulated and finance any rights or prepare for the transmission without excessive effort.

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🏡 Concrete example: transmission to children

This case illustrates in concrete terms how to optimize inheritance by combining dismemberment and life insurance, in order to reduce taxation and secure the heirs.

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To better explain

Imagine a 65-year-old couple who owns a house estimated at €400,000. If they passed it on directly, their two children would inherit €200,000 each, beyond the legal allowances, which would generate a heavy tax.

Instead, parents decide to Giving bare ownership of the house, while maintaining the usufruct. At their age, bare ownership represents around 60% of the value, or €240,000 in total. Each child receives €120,000. Thanks to the €100,000 allowance per child, no rights apply. The rest, €20,000, is taxed at 20%. Funding: €4,000 in total fees.

When the parents die, the usufruct is extinguished, and the children get the house back in full ownership, without additional taxes.

At the same time, parents open two life insurance contracts of €150,000 each, designating the same children as beneficiaries. Each child thus benefits from a capital excluding inheritance, which is completely exempt.

In the end, the two children inherit the house without rights thanks to the dismemberment, and each receive €150,000 each, also without tax, whereas a direct transfer would have cost more than €40,000 in rights.

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✅ Advantages and limitations of strategies

Each technique has particular benefits, but also constraints that must be carefully weighed.

The dismemberment and gradual donations protect the use of the property while reducing taxation, but they require notarial acts and good asset monitoring. Create a Family SCI offers flexibility and optimization, but adds legal and accounting constraints and management fees. THElife insurance transmits a clear capital, excluding inheritance, but remains limited to €152,500 per beneficiary. Finally, the diet of PACS (universal community) protects the spouse, but does not automatically reduce taxation on children.

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🛠️ Practical precautions

Before implementing these strategies, it is imperative to consult a notary, a tax consultant Or a specialized lawyer to customize your assembly. Each stage: donation, dismemberment, establishment of SCI, designation of beneficiaries, must be carried out by official acts and reported to the tax services. The structures chosen must also be reevaluated at each family change (new union, birth, divorce, etc.) and according to the evolution of laws.

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Conclusion

Anticipating the transmission of real estate makes it possible to significantly reduce inheritance taxes while securing the future of your heirs. Thanks to the levers of dismemberment, SCI, life insurance, life insurance, figures and warnings presented, you now have a clear overview to act effectively. Thoughtful wealth planning, supported by a professional, guarantees a transfer that is both serene and optimized.

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❓FAQS

Can several devices be combined without complicating succession?‍

Yes, for example, combining dismemberment and life insurance makes it possible to simultaneously transmit usufruct and capital without inheritance, without burdening the procedure.

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Do the strategies have to be repeated every 15 years?‍

Not necessarily every 15 years, but it is prudent to reassess the set-up after each deduction or in the event of family changes.

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Is the surviving spouse still protected?‍

Yes, if you are married or in a civil union under a universal community regime, the spouse gets back the property without rights. Without a civil partnership or marriage, he will have to use other devices such as life insurance to protect himself.