Inheritance of family property: how the \"Family Home 2025\" law changes the game

Summary: The so-called \"Family Home 2025\" law, passed in February 2025, introduces new measures to facilitate the intergenerational transfer of old real estate assets (especially residential property). This article explains how the extended 100% capital gains tax exemption for primary residences, the simplified dismemberment regime for inheritance, and the advantages for seniors help families keep their family home. Legal advice and concrete examples illustrate the best strategies depending on the family situation.

1. The challenges of inheritance transfer in 2025

The transfer of family real estate assets remains a major issue for many French families. Until now, capital gains taxation and the complexity of dismemberment made it difficult to retain and pass on \"family homes,\" particularly during inheritances or donations. The \"Family Home 2025\" law aims to address these problems by introducing unprecedented measures to preserve family real estate heritage.

2. A 100% capital gains exemption: an unprecedented tax advantage

The flagship measure of the law is the extension and broadening of the 100% exemption on capital gains when transferring a primary residence as part of an intergenerational transfer.

• Conditions: The transfer must involve a property held for more than five years and be made to direct descendants (children, grandchildren).
• Beneficiaries: Heirs or donees selling the property within two years of the transfer.
• Effect: Complete elimination of capital gains tax, allowing families to tailor their asset strategy to their needs.

Example: A couple sells a family home bought for €200,000 twenty years ago for €600,000. Previously, the taxable capital gain (€400,000) would have generated about €95,000 in taxes and social charges. Now, thanks to the exemption, the transfer or sale of the property is not subject to any capital gains tax.

3. Simplified dismemberment for inheritances

The law also introduces a simplified dismemberment system, making it easier to manage property during inheritances:

• Automatic usufruct: Parents or elders retain usufruct without complex formalities, allowing them to live in or rent out the property.
• Bare ownership: Children inherit the bare ownership, facilitating the gradual transfer of assets.
• Administrative simplification: Transfer procedures are streamlined, reducing notary fees and family disputes.

Advice: Dismemberment can be optimized depending on the age of the usufructuary and the value of the property. Personalized legal support is recommended to choose the most advantageous solution.

4. Protection for seniors and staying in the family home

Allowing seniors to keep their family home is a central point of the reform:

• Strengthened rights: Seniors can stay in their main residence without fear of eviction, even in the case of early transfer.
• Specific aid: Partial or total exemption from property tax for those over 70 and support for energy renovation.
• Anticipation of needs: Possibility to rent out the transferred property with tax advantages to finance dependency or home adaptation.

5. Legal advice and suitable asset strategies

The \"Family Home 2025\" law offers a favorable framework, but every family situation requires a tailored analysis. Here are some recommendations:

• Consult a notary or wealth management advisor to consider the benefits of shared donation or full ownership transfer versus dismemberment.
• Check the holding conditions of the property and plan the transfer to fully benefit from the capital gains exemption.
• Consider setting up a family SCI (real estate company) to organize collective management and gradual transfer of real estate assets.

Example: In a blended family, the SCI allows for the fair distribution of usufruct and bare ownership between heirs, while securing the surviving spouse’s right to remain in the home.

Conclusion

The \"Family Home 2025\" law marks a major step forward for real estate inheritance. With its incentive tax measures, simplified dismemberment, and enhanced protection for seniors, it offers new opportunities to preserve and enhance family assets. To fully benefit from these measures, it is essential to consult legal and estate planning professionals who can develop the most suitable strategy for each family’s situation.