Property abroad for a child: gifts, minors, student housing

Many parents consider buying a flat in the city where their child will study, or gifting a share of a family property abroad, so that the child "has something of their own". The idea is simple, but three systems meet in it: the law of the country where the property stands, the tax rules of the parent, and the tax rules of the child. This article lists the questions to settle before you sign. It is general information; check the details locally.

Three ways to put a property with a child

• Buy it in the child's name. The child is the owner from day one. If the child is a minor, special rules on who acts for them usually apply.
• Buy it yourself and gift it later. You are the owner first, then transfer it by gift deed. This may trigger gift tax and transfer fees at the time of the gift.
• Buy it yourself and let the child live in it. You stay the owner; the child uses the property. This is the simplest legally and often the most flexible for student housing.

Which one is best depends on the child's age, residence, your plans for the property and the tax rules involved.

Gift tax: two countries may be involved

A gift of real estate can be taxed in the country where the property stands, in the country where the donor or recipient lives, or in both. Rates and exemptions often depend on the relationship: gifts between parents and children are usually treated more favourably than gifts to other relatives or non-relatives, but the details differ widely. Some countries have no gift tax at all, some tax gifts through the inheritance tax system, and some require a report even where the tax is zero.

What to check with a tax adviser:

• Does the country where the property stands tax a gift from a non-resident to a non-resident?
• Does your home country tax the donor or the recipient, and must the gift be reported (in some EU countries close relatives are exempt if reported within a deadline)?
• Is a buyer's payment of the price on behalf of the child treated as a gift of money first?
• Does a double-tax treaty cover gift or inheritance tax? Many treaties cover income taxes only.

We do not give rates or thresholds here because they vary and change; a gift that was free last year may not be this year. See also total cost of ownership.

A minor as an owner

In most legal systems a minor can own property, but cannot act alone. Typically:

• The parents or legal guardians sign on behalf of the child.
• A sale, mortgage or gift of the minor's property often needs the consent of a guardianship court or authority, to protect the child. This is common in many countries but we have not verified the rule for each one.
• The consent may take weeks, and the court may refuse if the transaction does not look to be in the child's interest.
• Income from the property, such as rent, may be managed by the parents under limits, and tax is often payable by or for the child.

Practical effect: a property in a minor's name is harder to sell quickly. If you may want to sell in the next few years, think twice before registering it in a minor's name. Also check what happens when the child reaches the age of majority: the age differs by country, and a child who lives in another country may be subject to the law of their habitual residence for capacity matters. Ask a local lawyer.

Usufruct and trusts

Two structures are often mentioned. They can make sense for some families but are not a way to avoid tax, and tax authorities look at their substance.

• Usufruct. The child (or someone else) owns the bare property, while the parent keeps the right to live in or rent it for life or for a period. Usufruct exists in many civil-law countries. It gives the parent control, but it has tax effects of its own, and the rules for valuing it differ.
• Trust. A common-law tool where a trustee holds the property for a beneficiary. Many continental countries recognise trusts only partly or tax them in unexpected ways, and some do not allow land in a trust. For a EU resident, a trust may also carry reporting duties at home. Take advice before you consider one.

Student housing abroad

A flat for a student is a very common reason. Things to weigh:

• Compare with renting. A purchase locks capital for years, while a rented room can be cheaper if the studies last three or four years. See calculators to model it.
• Check the local rules on short lets: in many university cities you may rent out spare rooms only under licence or within limits.
• If the child is over 18 and a tenant or owner, local rules on the landlord's duties, insurance and community fees apply.
• Plan the exit: the property will have to be sold or used for another purpose after graduation. Ask what the local market in a student district looks like in resale. We do not give yields for this article.
• If you are not present, see buying property abroad remotely.

Succession and forced heirship

A gift made during life can change what other children receive after your death. Under the succession law that applies, gifts to one child may be counted back when the estate is divided, or may reduce the others' protected shares. Under EU Regulation 650/2012, the law of your last habitual residence normally governs your whole succession, unless you choose the law of your nationality. Tell the lawyer about all your children before gifting to one. See the official text on EUR-Lex.

FAQ

Can a child under 18 own a flat abroad? In most countries yes, but a parent or guardian signs for them, and a later sale may need approval by a court or authority.

Is a gift to a child always tax-free? No. Treatment depends on the countries involved and the relationship. Some countries exempt close family, often with a report required. Check both countries.

Is it better to buy in the child's name or gift later? There is no general answer. A later gift may create tax on the transfer, while buying in the child's name may raise questions about the source of the money and about guardianship consent.

Can the parent keep control? Through usufruct or by remaining the owner while the child lives there. Both have legal and tax effects that vary by country.

Does a gift affect my other children? It can, through rules that count lifetime gifts at succession. Discuss it with a lawyer.

How we help

D.H. Realting is a trilingual platform that finds properties abroad and coordinates independent local lawyers and tax advisers, who can advise on the form of ownership and the tax in both countries. This text is informational and is not legal, tax or investment advice. Rules change, so verify the current position with a qualified professional.