You pay next to nothing to transfer your fractional ownership property to your loved ones.
A quick recap of what the share price includes at purchase
When you purchase a share of a property through fractional ownership, it typically includes various costs such as stamp duty, legal fees, independent audit of the property and also investment audit including rental projection, the agency commission and the setup of the ownership structure. These expenses are factored into the purchase price of the share (usually 1/8th share), ensuring a transparent and all-inclusive transaction.
Other extra costs will include most probably: renovation costs, interior design & furniture.
Fractional ownership provides an accessible way to invest in high-value real estate assets without the burden of additional fees and administrative tasks.
When you pay the price of your co-ownership share, you pay for the property purchase price + the stamp duty and purchase tax to be paid on the property
Transferring your shares to your children, your spouse or any loved one is tax-efficient!
It takes only a minute and we can send you the best properties to fit your requirements.
Imagine a scenario where you could transfer your beloved home to your child for an unbelievably low cost of only 500€ in legal fees. It’s no secret that transferring or donating a property to your descendants can often be a cumbersome and financially burdensome process, well in the tens of thousands (also inheritence/donation tax in Europe is anything between 7.5-45% of the amount of the property value). The expenses associated with legal procedures, donation tax, and setting up the necessary ownership structures can quickly add up, leaving many feeling overwhelmed and selling the property.
However, what if I told you that there is a solution that allows you to accomplish this transfer effortlessly and at a fraction of the usual cost?
With the concept of fractional ownership, such a possibility becomes a reality. Fractional ownership enables individuals to own a share of a property (yet the use of 100% of the property), dividing the costs and responsibilities among multiple owners. This innovative approach has revolutionised the real estate industry, offering an accessible and cost-effective means of property ownership.
Now, let’s consider an example. Imagine you own a stunning holiday home in Ibiza that you want to pass on to your child. In traditional property transfers, the associated expenses, such as legal fees and stamp duty, can quickly escalate, often making it financially impractical. However, with fractional ownership, you have the flexibility to transfer a portion of your property to your child at a significantly reduced cost. If, for example, you transfer a 1.6M€ house in Ibiza to your child, your child will need to pay transfer tax on the property value.
With fractional ownership, your child will pay inheritance tax on only a minor portion of the property, the share(s) that you own. If you own one share (1/8th) valued at 200,000€ (based on 1.6M€ villa in Ibiza), your child will pay transfer tax on that value only. Also transfer/inheritance tax is often lower in percentage for lower amounts.
In France, every 10-15 years, you can donate a certain amount to your descendants (spouse/children) free of tax. Most countries have tax-free allowances, and in Spain, this can vary greatly depending on the region. In France, it only one at a national level.
Through a straightforward process (much easier than organising the property transfer) conducted at a public notary, you can facilitate the transfer of ownership for a mere few hundred euros. By embracing fractional ownership, you not only make the dream of passing on your home to your child a reality, but you also do so in a way that is both convenient and affordable. The simplified transfer process, combined with the cost-effectiveness of fractional ownership, ensures that the burdensome expenses commonly associated with property transfers are mitigated, allowing you to focus on creating a lasting legacy for your family.
For example, you wish to transfer a 1.6M€ house in Menorca to your child, your child will need to pay transfer tax on the full amount. With fractional ownership, you will pay transfer tax on the share(s) that you own. If you own one share (1/8th) valued at 200,000€, you will pay transfer tax on that value only. Also transfer/inheritance tax is often lower in percentage for lower amounts. In France, for example, every 10-15 years, you can donate a certain amount to your descendants (spouse/children) free of tax (currently 100,000€).
Example: What your child pays when you transfer that 1.6m€ villa in France
- Donation/inheritance tax rates between 5-45% to be applied on 1.5M€ property price (minus the tax-free 100,000€ donation threshold). This would be 352,000€ in France. Above 15,900€ you pay 20% tax, above 552,324€ you pay 30% and above 902.838€ you pay 40%.
- Notary/legal fees. Donations/inheritance of real estate cost several thousand euros as the operation can be complex. In France, it would be around 15,000€ for a 1.5M€ property.
- You also need to add any capital gains tax if the property increased in value over the years and potentially pay income tax on that amount.
*These are example values and tax calculations can vary without notice. For precise calculations, contact a legal specialist.
What your child pays when you transfer that 1.6m€ villa 1/8th share (value 200,000€)
- Donation/inheritance tax rates between 5-20% to be applied on 200,000€ share (minus the tax-free 100,000€ donation threshold). This would be 18,195€ in France. The highest inheritance tax rate is 20%.
- Notary/legal fees. Donations/inheritance of real estate cost several thousand euros as the operation can be complex. In France, it would be around 500€ for transferring the share.
- You also need to add any capital gains tax if the property increased in value over the years and potentially pay income tax on that amount but of course, it is based on the share value, that is 1/8th.
In Spain, inheritance/donation tax is between 7.5-34% but each region offers tax-free allowances. A very generous region currently is Andalucia where you virtually pay no inheritance tax.
There are also other ways to transfer instead of transferring to a physical person. You can use naked property/usufruct but also use companies. Contact us for more details on the best way to optimise your property investment.
Give your children and grandchildren a life of exceptional holidays in magnificent residences…
Due to the restrictive nature of inheritance laws, which often compel your successors to sell inherited homes, fractional ownership presents an ideal solution for owning multiple holiday properties or a portfolio of residences. With this approach, you can effortlessly possess a sun-kissed villa, a ski apartment in the French Alps, and a charming country house in Normandy. By transferring these three valuable real estate assets to your descendants, they would pay less than half of what they would typically incur in inheritance tax for a single property!
For further information, please don’t hesitate to contact us.