Buying an apartment for my mom
Buying an apartment for my mother in Luxembourg — whose name should it be in?
I currently cover the housing costs for my mother’s apartment in Luxembourg City. I’m now considering buying an apartment for her instead, so she has a comfortable and stable place to live.
The main question is whether I should buy the property in my own name or in my mother’s name.
If I buy it in my name, it would essentially be an investment property. If I buy it in my mother’s name, it would be her first property purchase, which appears to have some advantages in terms of the required down payment and transaction costs.
However, buying it in her name raises a few questions, and I’d really appreciate advice from people familiar with Luxembourg tax and inheritance law:
1. Tax implications for my mother:
If the apartment is in my mother’s name but I make the initial payment, financing payments, and other property-related payments on her behalf, could this create any tax liability for her? She currently has no income of her own.
2. Tax implications for me:
Would I be able to claim any tax deductions or other benefits on my Luxembourg tax return because I am financially supporting the purchase/payments, even though the property is in my mother’s name?
3. Inheritance planning:
Is there anything I can do now, when purchasing the property, to make the inheritance situation clearer in the future? I have a sister, and she fully acknowledges that the property would effectively be my investment and does not want any interest in it. Is there a legally useful way of documenting this now, or would that not really help?
4. What happens when my mother passes away?
If the property is in my mother’s name and eventually forms part of her estate, would my sister have a legal right to claim a share of the property despite having no involvement in purchasing or paying for it? If so, would transferring/inheriting her share to me create any tax liability for me at that point?
I understand that this is something I should ultimately discuss with a Luxembourg notary/tax adviser, but I’d first like to understand the general principles and hear from anyone who has dealt with a similar situation.
For context: I am a Luxembourg citizen and would be funding the purchase; my mother is a resident and has no income of her own.
Any insights, particularly from people who have actually gone through this in Luxembourg, would be greatly appreciated.