The split purchase is a way of purchasing a property (often real estate) whereby one buyer purchases the bare ownership and one buyer the usufruct (hence the term "split"). Because the usufruct automatically extinguishes upon the death of the usufructuary and accrues to the bare owner without the latter paying inheritance tax on it, a split purchase is often used for estate planning reasons. In this, the parents buy the usufruct over a property (often a second residence) so that they can either use the property themselves or rent it out and collect the rental income. The children then buy the bare ownership and become full owners when the parents die, without having to pay inheritance tax.
Points of interest
For inheritance tax not to be due at the time of death of the parents, it is required that the bare owners pay for the purchase of the bare property themselves with their own means and that this is also clear from the entries in the authentic deed. If the bare owners do not finance the bare ownership themselves, the tax authorities will, at the time of death, act as if the property were still in the parents' estate and the value of the full ownership will be taxed in the inheritance tax.
If the children themselves have sufficient funds or arrange financing with the bank, in principle no problems arise in this regard, but the cat is in the wheel if the parents want to give the money for the purchase of the bare property to the children first.
There has already been a great deal of discussion about this prior gift, and the position of the tax authorities has changed several times over the years, mainly regarding the question of whether or not gift tax should be paid on the gift to the children. Certainly at the time of the creation of the Flemish Tax Administration, changes or additions to the current position were made at every turn, until the Council of State put a stop to the Flemish Tax Administration and annulled the position in its entirety.
Since then, in Flanders it has again been possible to donate the money for the purchase of the bare property to the children by means of an unregistered bank gift - and thus without paying gift tax.
Time of donation
The next question that arises is that of the time at which the gift should be made, namely whether it should already take place prior to the compromise, or whether it is sufficient that the money is transferred prior to the authentic deed. Recently, the federal administration published the position that the bare owner must already have made the donation prior to the signing of the deed. the compromise must have the money for payment the bare ownership. A gift after the compromise is therefore too late. This regulation is currently applicable to split purchases in the Walloon and Brussels Capital Regions.
We had to wait and see what Vlabel's attitude would be - would the federal position be followed or not? This has recently been clarified by means of position 20067. In this position Vlabel confirms that the compromise not the decisive moment at which the gift must be made and that it is therefore sufficient for the funds to be in the children's accounts at the time when the authentic deed is executed. It is important in this respect that the compromise clearly states that the advance payment will be made exclusively by the usufructuary and that, when the balance of the purchase price is paid, it will be charged in full against his/her share in the sale price.
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