The Donation with a Retention-of-Usufruct Clause and Registration Duties
Marie, 72, wants to donate her Brussels house (valued at 500,000 EUR) to her daughter Julie, but keep the right to live there and receive the rental income for life. She also wants to donate 100,000 EUR in cash to her son Pieter. Marie's husband died last year; she has no other assets of significance. The notary is asked to draft the deeds and advise on the tax treatment. Marie wonders whether she can avoid registration duties by making the donation in a private deed and registering it later. She also asks whether the usufruct she retains reduces the taxable base.
1. What is the correct form for the donations and what are the consequences of a private deed?
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A donation of immovable property must be made by notarial deed and transcribed; a private deed is void as a donation and cannot be registered as such. The notary must explain that a private deed purporting to donate the house is unenforceable and could be requalified, with penalties. The donation of cash must also be made in the required form to benefit from the reduced registration duty rate; a manual gift is possible but carries evidentiary and tax risks. The notary should draft two separate deeds or one deed with distinct clauses, ensure Marie's capacity is verified, and check for any prior donations that could affect the reserved share. The notary must also warn that registering later does not cure the defect and may trigger higher duties and interest.
2. How should the notary calculate the registration duties and treat the retained usufruct?
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For the house, the taxable base is the value of the bare ownership, not the full 500,000 EUR, because Marie retains the usufruct. The notary must value the usufruct using the statutory age-based conversion: at 72, the usufruct is valued at a fixed fraction of the property, and the bare ownership is the remainder. Registration duties are then applied to the bare-ownership value at the applicable Flemish rate for donations of immovables, with any reduced rate for a lineal descendant. For the 100,000 EUR cash donation, the notary applies the reduced rate for movable donations if the deed is registered within the required period. The notary must also consider the reserved share: Pieter and Julie are both children, so the donations must be checked against Marie's disposable portion, and the usufruct retention affects the calculation of the reserved share at Marie's death.