Inheritance Tax on French second home

Hove_Womble · 8 November 2012 at 2:49PM

Hi folks
Hopefully, I've picked the right forum? I am after some advice on inheritance tax regarding a property owned abroad.

My parents own a second home in France (value circa £300k) and a house in England (circa £650k). My father is very ill and my mother is keen they do the right thing with their French property to avoid punitive taxes.

As I understand it, on death the French property would be split between spouse and children. I am one of three sons, and the inheritance tax allowances in France and the UK suggest to me that no inheritance tax would be payable on the French property as it below the threshold for both. I believe my mother would own 1/4 of the property and 3/4s would be split between the three sons. Is there anything my parents should do at this point? It would appear my father would not be utilising his full IHT allowance as it stands?

Many thanks
Matt

zygurat789 · 8 November 2012 at 3:49PM

First of all I hope your father gets better and then you can all plan for this future inevitability because there may not be enough time to do anything now.
Second I have no knowledge of French law so you should also post this on MSE en Francais.
However, Inheritance tax is a tax on the estate of the deceased before any division between beneficiaries are made and it looks to me as if the division you refer to are intestacy provisions, has your father made a will? Also you say your parents own the properties there are two different legal ways this can be done which will affect the eventual ownership.
There is something known as a "deed of family arrangement" whereby the beneficiaries can rewrite a will, if they are all in agreement and is effectively retrospective planning.
Your parents would appear to be worth approx £1m, the best advice is to consult a solicitor, but if you die worth half a million you should be prepared for a tax bill.