For parents, it may seem natural to house their child as long as it suits them. However, beware of the consequences!

Housing your child, an obligation... or not

The law requires parents to house their children when they are unable to support themselves. This is why, even for children who have reached the age of majority and are in higher education or have no income, it is a legal obligation. However, if they can afford it, care must be taken.

What are the risks?

If parents host a child with the intention of saving him, or her, rent that he or she might otherwise have to pay, this can be considered as a gift, an indirect donation. Recent decisions by the Poitiers Court of Appeal and the Court of Cassation (ruling of 2 March 2022) have validated this risk of requalification. These disputes generally do not originate from the tax authorities because they are caused by one or more members of the siblings. The reclassification of the accommodation as an indirect gift has tax consequences since Article 784 of the General Tax Code requires all gifts received by the heirs to be recalled at the time of the inventory of the estate.

Solutions:

One idea that may come to mind is to have the child pay rent, even if it is reduced. The first consequence is that the parents will be taxed on their new income. Not only will it be declared and taxed as income tax, but there will also be social security contributions (17.2%). And if the rent determined is lower than a market rent, the parents could still be taxed on the market rental value.

Solutions exist to anticipate these risks and avoid family conflicts during such difficult times. Wealth A7 can support and advise you, contact us!
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