Taxes: “Is a donation of money subject to inheritance tax?”

A capital reader wonders about the tax consequences of a donation made during her lifetime to her only daughter. She fears that this donation will be taxed twice: under donation rights, then at the time of the estate.

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Françoise addresses the following question: “Hello, I did a donation of money To my daughter, who is my only heiress, in 2017. Donation rights were settled at the time. However, I heard that this sum would still be reintegrated into the succession at the time of my death. Does this mean that my daughter will have to pay rights a second time on this same amount? Can you enlighten me on this point? ”

Hello Françoise, and thank you for your question, which often comes back when we mention the taxation on the donations of the living. Rest assured, a donation does not lead to a double taxation at the time of the succession. But it is important to understand how tax abatements work.

As Mathilde Carrier explains, investment advisor and wealth in Nîmes, once you have settled rights during the donation in 2017, “There will be no other rights to pay on this donation to your death”. On the other hand, this donation reduces the tax reduction to which your daughter is entitled during your succession. In direct line, each child benefits from a reduction of 100,000 euros on the inherited part, renewable every 15 years. This means that all donations made within 15 years of death are taken into account to calculate this exemption threshold.

No double taxation, but management of the abatements to know

Good news: if the donation took place in 2017, and you are still alive in 2032, the allowance will be “recharged”. Your daughter will therefore not pay any additional rights to the amount given, and she will again be able to benefit from the reduction of 100,000 euros on the future heritage. This is one of the major advantages of early transmission: optimizing taxation by spreading donations over time.

“In addition, another specific abatement applies in the event of a donation of money: up to 31,865 euros can be given in total exemption”adds Mathilde Carrier, provided, however, that you are under the age of 80 on the day of the act and your daughter is major. “This reduction is also renewable every 15 years, and accumulated with that of 100,000 euros”points the expert. It is therefore possible, in this specific case, to give up to 131,865 euros in tax franchise, a renewable amount every 15 years.

Take a concrete example. If you gave 75,000 euros to your daughter – still a minor at the time (without profit, therefore, of the reduction dedicated to the sums of money of 31,865 euros) – in 2017, and which you die in 2029, the reduction of 100,000 euros will not yet be recharged. Your daughter will therefore have to settle rights on the inheritance beyond 25,000 euros “remaining” on her reduction (100,000 – 75,000 = 25,000 euros). On the other hand, if you live until 2033, the allowance will be available again, and your daughter will fully benefit from the reduction of 100,000 euros.

In summary, Françoise, there is no double payment of rights on an already taxed donation. But the management of the abatements is essential to limit inheritance tax. This is why the scheduled donations remain an excellent tool for transmitting its assets smoothly, while reducing the tax bill.

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