Split ownership in France: bare ownership, usufruct and the 2026 tax scale

Updated 25 May 2026 — reviewed by Samuel Hayot, expert-comptable.

Split ownership — démembrement de propriété — is one of the most useful tools in French wealth and estate planning. It divides full ownership into two distinct positions: the usufruct (the right to use the asset and collect its income) and the bare ownership (the right to the asset's final value). At Hayot Expertise, we work with business owners, families and investors who need to understand not just how the mechanism works, but what the actual tax consequences are before they commit to a structure.

In short: split ownership separates income rights from long-term ownership. The Article 669 CGI tax scale determines the fiscal value of each right based on the usufructuary's age. It is effective for estate transmission and property investment — but only when the goal is clear, the documentation is solid and the exit is anticipated.

Under French civil law (art. 578 Code civil and following), full ownership has two separable components:

• The usufruct: the right to use the asset and receive its income — rents, dividends, economic benefit. This right is personal, non-transmissible on death in most cases, and has a defined duration.
• The bare ownership: the residual right of ownership. The bare owner holds no income during the usufruct period but recovers full ownership automatically when the usufruct ends, with no further transfer tax owed at that point.

This civil law framework is the starting point for every split-ownership structure. The tax consequences — which are considerable — flow from this civil foundation.

The taxable value of each right for gift and inheritance tax purposes (droits de mutation à titre gratuit, DMTG) is set by Article 669 of the French General Tax Code (CGI). The scale uses the usufructuary's age at the date of the transaction.

Source: art. 669 CGI. Verify the version in force at the date of the transaction.

Practical effect: when parents donate the bare ownership of a property and retain the usufruct, only the bare ownership value is subject to DMTG. For a parent aged 65 (bracket 61–70), bare ownership is 60% of full value. On a €600,000 property, the taxable base is €360,000 instead of €600,000. This is the core estate planning logic of the structure.

Fixed-term usufruct is common in structures involving a company or holding as usufructuary. In that case, the age-based Article 669 scale does not apply; valuation uses a financial present-value calculation. This matters significantly for structuring because the methods, and the resulting tax exposure, differ considerably from the lifetime usufruct used in most family contexts.

IFI (Impôt sur la Fortune Immobilière — wealth tax on real estate)#

For immovable property subject to the IFI, the usufructuary is generally liable on the full property value (art. 968 CGI). The bare owner is not taxable on the bare ownership value, except in specific cases where the split resulted from a gift with reserved usufruct by the donor. This is a significant consequence for wealthier clients: the IFI exposure is concentrated in the usufructuary's estate, not shared.

Income tax (rental income — IR foncier or BIC)#

Rental income from a split-ownership property is taxable in the hands of the usufructuary alone. The bare owner receives nothing during the usufruct and declares nothing. The usufructuary deducts allowable expenses under the applicable regime (régime réel or micro-foncier). This clean separation simplifies reporting but must be clearly documented in the deed and the rental management file.

Corporate tax (IS) — SCI holding companies#

When the property-owning company (SCI) is subject to corporate tax, the split-ownership of shares produces specific accounting and tax effects. The usufruct value must be amortised in the company's accounts. Dividend distributions follow the flat tax or progressive income tax depending on the shareholder's election. A split of SCI shares under IS calls for specific analysis: it is not the same mechanism as direct property ownership.

Split ownership can apply to a directly held property or to SCI shares. The effects are not identical and the distinction matters in practice.

Direct property: the split is civil and fiscal. The usufructuary manages the property, collects rents and pays running costs. The bare owner waits for reunification. The analysis is relatively straightforward.

SCI shares: the split applies to the shares themselves. Voting rights and profit distributions must be allocated in the company's articles and a separate démembrement agreement. The key question — who votes at general meetings, who receives distributed profits, how major decisions are made — must be answered explicitly in the documents. In the files we handle, disputes almost always arise when these clauses are missing or ambiguous.

Splitting SCI shares offers considerable flexibility: parents can retain management control and income while progressively transferring economic value to children. The cost is careful drafting. A poorly written SCI deed turns a useful tool into a source of family conflict.

For a deeper look at property-specific optimisation, see our article on bare ownership and usufruct in property investment.

A client, aged 66, owner of a Parisian rental apartment valued at €480,000, wished to begin transmitting the asset to her two adult children while retaining the rental income.

At age 66 (bracket 61–70 in the Art. 669 CGI scale): usufruct = 40%, bare ownership = 60%.

• Taxable base of the donation: €480,000 × 60% = €288,000
• Per child: €144,000
• Allowance per child: €100,000 (art. 779 CGI — subject to verification for prior gifts)
• Taxable fraction per child: €44,000

The client retains the rental income and continues to manage the property. IFI liability rests on the full €480,000 in her estate. At her death, the children acquire full ownership with no further transfer tax. The structure is coherent, well-documented and easy to explain.

This case works because the objective is clear, the allowances are available and the deed specifies that the mother bears running costs as usufructuary. When any of those three elements is missing, the structure becomes harder to defend.

At Hayot Expertise, we apply a consistent framework before recommending any split-ownership structure.

First, who needs current income and who can defer it? If the usufructuary does not genuinely need the income — or if the bare owner needs liquidity during the holding period — the economic logic may be weak regardless of the tax saving.

Second, what is the exit scenario? Reunification of rights can be neutral (death of usufructuary in a standard lifetime arrangement) or taxable (early buyout, sale of the full property before the term ends, atypical restructuring). Planning the exit at the point of entry avoids costly surprises.

Third, is the documentation complete? The notarial deed is not enough on its own. A well-drafted démembrement agreement between the parties — covering costs, decision-making, the Art. 605 and 606 Civil Code allocation of expenses, and the procedure for significant decisions — is what protects the structure over time.

Fourth, have all three tax levels been reviewed? Gift tax saving (DMTG), IFI impact and income tax allocation should be assessed together, not separately. An optimised DMTG position with a poor IFI outcome may not represent a genuine improvement.

For an honest review of the situations where split ownership creates more problems than it solves, see our article on the drawbacks of split ownership and our broader guide on wealth management strategy.

Clients sometimes underestimate what happens if the usufruct and bare ownership are reunited in an unplanned way. If the usufructuary buys back the bare ownership, or if the bare owner acquires the usufruct before its natural end, the transaction is taxable. Equally, selling the property during the split requires both parties to agree and to share the sale proceeds according to the then-current value of their respective rights — calculated at the date of sale, not the original deed. Getting this wrong creates both civil disputes and unexpected tax liabilities.

• The objective is stated clearly (transmission, investment, income, protection)
• The usufructuary's exact age at the deed date is confirmed for the Art. 669 CGI bracket
• The property's market value at the transaction date is documented
• The allocation of expenses (Art. 605 and 606 Code civil) is explicit in the deed
• If SCI shares are involved, voting rights and profit allocation are set out in the articles
• IFI, income tax and corporate tax effects have been reviewed together
• Exit scenarios (death, sale, early reunification, future gift) are anticipated
• An expert-comptable and a notaire have both been consulted before signature

Every file is different. Age, asset type, family structure, applicable tax regime and holding horizon all directly influence whether the structure makes sense and how it should be designed.

We can help you analyse the wealth, tax and practical effects before any commitment is made.

This article is for information purposes only. It does not replace a personalised review of your situation, legal advice, or a formal advisory engagement. Tax rules and scales are subject to change. Consult a qualified professional before making any decision. EN_CONTENT_END