Drawbacks of Property Stripping in 2026: 10 Risks to Arbitrate

Updated 12 May 2026. Property stripping in France — the separation of usufruct (usufruit) and bare ownership (nue-propriété) — is governed by Articles 578 to 624 of the French Civil Code. Often presented as a powerful wealth tool to transmit assets, optimise IFI (wealth tax on real estate) and anticipate succession, it frequently masks 10 structural drawbacks abundantly documented by the French tax administration, the Court of Cassation and notarial practice. Before engaging in a donation with reserved usufruct, a cross-stripping arrangement or a bare-ownership SCPI investment, you must integrate this lucid reading. At Cabinet Hayot Expertise in Paris, we arbitrate these structures with a systematic grid: civil utility, tax security, family supportability and long-term liquidity.

Articles 578 to 624 of the Civil Code#

Article 578 of the Civil Code defines usufruct as the right to enjoy assets owned by another, as the owner himself, but with the obligation to preserve their substance. Bare ownership, the mirror image of usufruct, is the right to dispose of the asset at term. Articles 579 to 624 organise duration, mutual obligations, charges and extinction. Article 617 lists five causes of extinction: death of the usufructuary, expiry of the term, consolidation, thirty-year non-use, total loss of the asset.

Article 669 CGI valuation scale#

Article 669 of the French General Tax Code sets the tax value of usufruct and bare ownership. For lifetime usufruct, the value of usufruct decreases by 10-year brackets: 90% under 21, 80% from 21 to 30, 70% from 31 to 40, 60% from 41 to 50, 50% from 51 to 60, 40% from 61 to 70, 30% from 71 to 80, 20% from 81 to 90, 10% beyond 90. Bare ownership is the difference to 100%. For temporary usufruct, the value is 23% per 10-year period started, capped at the lifetime usufruct value calculated by age.

Why anticipate drawbacks before acting#

A donation with reserved usufruct made on a property worth €800,000 by a 65-year-old parent legally transmits 60% of the value (€480,000) in bare ownership. For 15 to 25 years, this property will remain legally locked between usufructuary and bare owner. The 10 drawbacks below are not theoretical: they materialise almost systematically once duration exceeds 10 years or once an event (resale, heavy works, divorce, succession conflict) occurs.

Inability to sell alone (usufructuary or bare owner)#

The first structural drawback: neither the usufructuary nor the bare owner can sell the split-ownership asset alone. The transfer of full ownership requires the joint agreement of both parties (Article 621 of the Civil Code). The usufructuary can legally transfer their usufruct alone, and the bare owner their bare ownership alone, but the secondary market for these isolated rights is virtually nonexistent at a fair price. A 70-year-old usufructuary mother wishing to sell the Paris apartment to fund her nursing home cannot do so if her three bare-owner children refuse.

Judicial procedure in case of disagreement#

In case of deadlock, the only route is the judicial court. The procedure for judicial sale authorisation (Articles 815-5 and 815-5-1 of the Civil Code, applicable to stripping by analogy) lasts on average 12 to 24 months in Île-de-France, with attorney fees of €5,000 to €15,000 depending on complexity, plus a possible judicial expert appraisal of €3,000 to €8,000. The judge may authorise forced sale if a peril or common interest is established, but the decision is not automatic.

Joint ownership and Article 815 CC#

When several bare owners are in joint ownership over the bare-ownership share — typically several children who received a joint donation — Article 815 of the Civil Code adds a layer of blockage. The rule is "no one is required to remain in joint ownership", but exiting requires two-thirds majority agreement (Article 815-3) for administration acts, and unanimity for disposal acts. A minority child can block a decision for years, until the extinction of the usufruct.

Articles 605 and 606 — maintenance and major repairs#

Article 605 of the Civil Code imposes on the usufructuary the current charges: property tax, maintenance, small repairs, current condominium charges. Article 606 reserves major repairs for the bare owner: load-bearing walls, vaults, beams, full re-roofing, dams and retaining walls. The Court of Cassation case law (notably Civ. 3e, 18 December 2013, no. 12-18.537) clarified that the qualification of major repair is interpreted strictly, but grey zones persist: replacement of a boiler, façade renovation, terrace waterproofing.

Grey zone on the qualification of works#

In practice, disputes between usufructuary and bare owner concern the qualification of works. Full roof replacement: Article 606 (bare owner). Replacement of individual tiles: Article 605 (usufructuary). Replacement of an individual boiler: generally maintenance (usufructuary). Improvement or transformation works: no reimbursement due to the usufructuary at the end of stripping, except by express agreement (Article 599 paragraph 2 of the Civil Code). The usufructuary who finances €50,000 of renovation to enhance their enjoyment recovers nothing at their death.

Financial asymmetry: young bare owner / elderly usufructuary#

The classic drawback scenario: 80-year-old usufructuary with a monthly net pension of €1,800, 45-year-old executive bare owner. The roof requires €25,000 of works (Article 606). The bare owner must pay, but why finance an asset they do not enjoy? The usufructuary cannot pay instead. The asset deteriorates, loses 10 to 20% of value over time. The preventive solution: a pre-drafted addendum in the donation deed, an annually funded reserve, or a documented joint-ownership convention.

IFI since 2018 — usufruct/bare ownership split#

Before 1 January 2018, the usufructuary bore 100% of the wealth tax (then ISF) on the full ownership value — this was an advantage for the bare owner, who remained outside the scope. Since the 2018 Finance Law, Article 968 CGI has reversed the rule: IFI is now split between usufructuary and bare owner according to the Article 669 CGI scale. Consequence: a 50-year-old bare owner whose bare ownership of the Paris apartment is worth 60% of €1.5M = €900,000 enters the IFI calculation if their global taxable net assets exceed €1.3M. An unanticipated tax tipping point.

Three exceptions maintain 100% taxation at the usufructuary's level#

Article 968 CGI maintains three exceptions where the usufructuary remains taxed on 100% of the full ownership value: stripping resulting from the application of Articles 757, 1094 or 1098 of the Civil Code (succession of the surviving spouse); sale with reserved usufruct granted to the State, a department, a municipality, a public establishment; stripping resulting from a gift or legacy to the State. These exceptions are narrow and mainly concern succession between spouses.

Abuse-of-law risk and "mini-abuse" L64 A LPF#

Article L64 of the Tax Procedure Book sanctions tax abuse of law with an 80% tax surcharge when the structure is purely tax-driven (exclusively tax-driven and fictitious operations). Since the 2019 Finance Law, Article L64 A LPF introduces the "mini-abuse of law" — 40% surcharge — which targets structures primarily tax-driven without being exclusive. Cross-stripping between father and mother without real wealth motive, or temporary usufruct stripping on SCPI sold shortly after, are regularly requalified. Securing requires plurality of motives (transmission, management, spouse protection) and contemporaneous documentation.

Disguised donation and erroneous valuation#

The valuation of usufruct must strictly respect the 669 CGI scale at the day of donation. Overvaluing the usufruct to reduce the donation base to children exposes to a tax reassessment for disguised donation — bare ownership valued too low is treated as an undeclared benefit. Undervaluing the usufruct exposes to qualification of hidden advantage to the bare owner. Our approach at Cabinet Hayot Expertise imposes a contradictory, documented valuation aligned with official scales and recent notarial appraisals.

Real estate capital gains split#

The disposal of a split-ownership asset triggers the calculation of two distinct capital gains: that of the usufructuary on their share of price, and that of the bare owner on their share. The acquisition date retained is that of the stripping (donation, succession, purchase). The holding-period rebate (6% per year from the 6th to the 21st year, 4% the 22nd, i.e. full income-tax exemption at 22 years and social-contribution exemption at 30 years) is calculated separately. Concrete case: bare owner inheriting at 30, selling at 50 after death of usufructuary at 48. The gain on the BP share is calculated over 20 years (so full rebate), but the share recovered in full ownership at death restarts at zero holding period for that quota. Consequence: unexpected partial taxation.

Virtually nonexistent secondary market for usufruct or bare ownership#

The usufructuary or bare owner can legally transfer their sole right (Article 595 of the Civil Code for usufruct). In practice, the secondary market is virtually nonexistent except for structured products (fixed-term SCPI bare ownership resold by professionals). The individual wishing to transfer their sole bare ownership on a real estate asset rarely finds a buyer above 60-70% of the theoretical Article 669 CGI value. The practical discount ranges from 15 to 30% depending on the usufructuary's age and underlying liquidity.

Notary fees and extinction formalities#

Upon extinction of usufruct (death of usufructuary or term of temporary stripping), the bare owner automatically becomes full owner without succession duties on the share recovered (Article 1133 CGI) — this is the central advantage of stripping. But formalities remain: notarial deed of extinction (€200 to €500 excluding VAT), registration with the land publicity service, property tax update. For SCPI stripping, the management company handles the change free of charge, but a 2-to-6-month delay remains a watch point.

No income during the duration#

Bare-ownership SCPI investment is marketed over durations of 5, 7, 10, 15 or 20 years. During this period, the bare owner receives no income (the temporary usufruct — generally institutional — collects 100% of rents). The entry discount (typically 25 to 40%) theoretically compensates for the absence of income. But over 15-20 years, real yield depends on maintaining the value of the units.

Valuation drop risk#

The SCPI market experienced significant price adjustments in 2023-2024: unit price drops of 5 to 15% on office SCPIs and certain European commercial SCPIs. A bare owner who bought at 70% of the value in 2022 over a 10-year horizon may recover units at a value below the initial investment. The discount does not systematically protect against the underlying's drop.

Virtually nonexistent liquidity#

Unlike SCPI held in full ownership, where the secondary market functions (at a discount, but it functions), SCPI bare ownership has no fluid secondary market. Exiting before term requires finding a private buyer accepting an additional discount, or negotiating with the management company an early usufruct return (rare and costly). SCPI temporary stripping is, in fact, a locked investment until term.

Article 920 CC — reduction action#

Article 920 of the Civil Code sanctions excessive donations that encroach on the heir reserve of descendants. A donation with reserved usufruct granted to only one of three children, for example, may be subject to a reduction action by the other two after the donor's death. The valuation is made according to the Article 669 CGI scale at the day of donation, but the real economic valuation at the opening of succession may reveal substantial gaps.

Unequal donations between children#

The classic conflict scenario: a parent donates the bare ownership of their Paris residence (value €600,000, BP donation at 60% = €360,000) to only one of three children, reserving usufruct. At death, the other two children invoke Article 920 and request reporting and reduction. The calculation becomes extraordinarily complex: asset value at the day of death, latent capital gains, works performed, reporting indemnity. Equity between children must be prepared at the donation stage, ideally with a succession pact or a donation-partage.

Post-mortem succession conflicts#

The reduction action is time-barred at 5 years from the opening of succession and 2 years from the moment heirs became aware of the encroachment on their reserve, without exceeding 10 years from death (Article 921 of the Civil Code). Post-mortem succession conflicts linked to unequal stripping represent a significant share of notarial litigation in Île-de-France.

Succession between spouses and Article 757 CC#

The succession usufruct of the surviving spouse, governed by Article 757 of the Civil Code, remains a robust wealth tool. The spouse inherits, at their choice, the totality in usufruct or one quarter in full ownership. The legal usufruct of the spouse maintains IFI taxation at 100% on the usufructuary (exception Article 968 CGI), avoids conflicts with children during the spouse's lifetime, and extinction at death occurs without additional duties (Article 1133 CGI).

Donation to children with retained enjoyment#

Donation with reserved usufruct on a rental property remains a classic structure when motives are plural: succession anticipation, progressive transmission, retention of rents by elderly parents. The drawbacks listed above are managed by a solid notarial deed, a detailed management convention and prior family alignment.

Purchase with elderly parents#

The purchase of a primary residence with elderly parents under stripping (parents as usufructuaries, children as bare-owner buyers) remains a useful structure when the objective is to house parents at optimised cost and anticipate transmission. The Article 669 CGI quota of contribution avoids the qualification of disguised donation.

The trade-off to arbitrate — stripping, donation, patrimonial holding#

In the wealth-planning files we support in Paris, the arbitrage between stripping, full-ownership donation and a patrimonial holding rests on four criteria: holding horizon (beyond 20 years, the holding often becomes superior); family governance (stripping suits united families, the holding suits extended or blended families); IFI tax profile (post-2018 stripping may push children into IFI); required liquidity (the holding offers a more flexible disposal framework via share sale).

The underestimated risk — IFI triggered on the bare owner#