Plan ahead to optimise

It's back-to-school time!
To mark the occasion, we invite you to solve this maths problem with us.

The problem:

Adeline wishes to give the bare ownership (nue-propriété) of her seaside flat to her two children, Maxime and Chloé.

Given that the flat is valued at 400,000 euros, that it has a bathtub with a leaking tap, that it is located near a railway line where trains regularly pass each other, that Adeline is 59 years old and that she has made no previous gifts to her children, how much gift tax will have to be paid?

Answer: 0 euros.

Given her age, Adeline's usufruct is valued at 50% for tax purposes. The bare ownership passed on is therefore valued at 200,000 euros in total. This value is divided between the two children, who will each receive the equivalent of 100,000 euros. As the tax allowance is 100,000 euros per parent and per child every 15 years, the gift of the bare ownership of Adeline's flat to Maxime and Chloé falls within this allowance.

No gift tax will be payable.
So the answer is 0!

By way of comparison, if the flat were passed on when Adeline dies, the inheritance tax payable would amount to 36,400 euros.

The total costs (tax, notaire's fees and disbursements) of the gift can be estimated at 7,500 euros, compared with 43,150 euros in the case of an inheritance.

…And for once, the leaking bathtub tap and the passing trains have no bearing on our answer!

(Infographic below in French.)