Trying to keep down inheritance taxes to a minimum does risk later coming back to bite inheritors.

Faced with a potentially large tax bill, not unnaturally, most inheritors do all they can to reduce the level of their inheritance tax liability.

The largest item of value in the estate of the deceased is likely to be real estate.

So when it comes to getting a valuation of the real estate for inheritance tax purposes inheritors look around for a sympathetic notaire or estate agent to give them the lowest valuation.

The problem that this raises is that if the property is later sold, the valuation that will be used for the purposes of calculating liability to French capital gains tax will be that given on the inheritance tax declaration.

In this respect it should be noted that, although a reduction in capital gains tax is available based on duration of ownership, the clock is rewound on transfer of the property to the inheritors.

This can then mean that the inheritors later end up paying far more in capital gains tax than they would have paid in inheritance tax.

In a recent court case in Paris, the inheritors later sold the property of their deceased father for three times the figure that had been assessed for inheritance tax purposes.

Faced then with a large capital gains tax bill they sought a retrospective alteration to the initial valuation, going even so far as to submit a revised inheritance declaration, enclosing a cheque for the new higher amount of inheritance taxes payable!

Now, although in principal it is possible to obtain a revision of the inheritance tax declaration (declaration rectificative) the French tax authority resists such applications where it is merely being done for the purposes of reducing the tax bill.

Numerous court decisions in the past have confirmed their right to do so, particularly where it arises subsequent to a sale contract actually being realised.

In the case recently considered at the Cour administrative d’appel in Paris, this principle was again reaffirmed.