Temporary Transfer of Usufruct: Complete Guide and Taxation 2026

This guide is written for expats and foreign founders by a French CPA, an English-speaking accountant in Paris, with practical focus on accounting in France, French corporate tax, business setup in France and French payroll.

Temporary Transfer of Usufruct: Practical Guide and Strategic Taxation in 2026#

The temporary transfer of usufruct is a powerful wealth and tax strategy, often used by managers and investors to optimize the transmission or collection of income. Well executed, it offers notable results for both the seller and the buyer (often an IS company). However, recent jurisprudential and legislative developments strictly regulate this mechanism in 2026.

In this exhaustive guide, the Hayot Expertise firm, an accounting firm in Paris 8, deciphers the mechanisms, the cross-benefits, and the risks (notably abuse of rights) of the temporary transfer of usufruct.

Property rights are traditionally divided into two elements:

• Usufruct (the right to use the property and receive income from it).
• Bare ownership (the right to dispose of the property, for example sell it, subject to the agreement of the usufructuary).

The temporary transfer of usufruct consists of an owner (or bare owner) transferring, for a determined or determinable period (fixed term, with a maximum of 30 years if the transferee is a legal entity), the right to use and enjoy an asset. This asset can be investment property, transferable securities or even SCPI shares.

In return, the transferor receives immediate capital: the transfer price, which corresponds to the present value of the net future income that the property should produce during the duration of the usufruct.

At the end of the agreed period (extinction of usufruct), the bare owner automatically and without formality regains full ownership of the property, in accordance with article 617 of the Civil Code.

The sale of the usufruct of a property makes it possible to activate several tax levers.

Immediate cash collection#

The transferor does not wait for the creation and regular distribution of income (rent, dividends) to benefit from it. He immediately receives capital to finance a personal or professional project, knowing that he will regain full ownership of his property in the long term.

Optimization of the Real Estate Wealth Tax (IFI)#

In matters of IFI, the general rule (article 968 of the CGI) provides that the dismembered real estate property is taxable in its entirety to the usufructuary's assets. Thus, the transferor (who has retained bare ownership) takes the value of the usufruct out of his IFI basis (or even the entire value in full ownership if the usufructuary does not meet one of the rare exceptions). A major lever for taxpayers wishing to reduce their tax base during the dismemberment period.

Taxation of the transfer price (Article 13, 5° of the CGI)#

Since an anti-abuse law introduced in 2012, targeted at the first transfer for consideration of a usufruct, the tax treatment is established as follows: the price received by the transferor is taxed in the category of income generated by the property (land income for real estate, or income from movable capital for social rights).

However, this must be measured carefully:

• The advantage often lies in the withdrawals and the exit from a heavy cycle.
• Future income completely escapes the transferor during the usufruct (no more IR, no more social security contributions over time).
• Recent case law (Council of State, October 2024) specifies that the extension of an existing usufruct is treated as a new first transfer, therefore also taxed as income (and not as a capital gain).

The transferee is very often a company subject to Corporate Tax (IS), for example the operating company or the holding company of the transferor.

A successful cash investment#

The company uses its excess cash to acquire a temporary usufruct. Over the period, it will collect recurring income from the product (rent or dividends).

Amortization of usufruct: the keystone of optimization#

Unlike the bare owner or the full owner, a company which acquires a temporary usufruct records this purchase as an asset on its balance sheet and will carry out its tax depreciation on a linear basis over the entire duration of the dismemberment. This depreciation charge will wipe out (or significantly reduce) the taxable income generated by the exploitation of the usufructuary property for IS.

Tax-free restitution#

At maturity, the usufruct expires and the net book value of the usufruct is zero on the balance sheet. Bare ownership joins usufruct with the transferor in a transparent manner without "resale" tax friction.

It is crucial to properly assess the value of the usufruct transferred. Overvaluation or undervaluation directly exposes you to the risk of tax adjustment.

• The tax scale (Article 669 of the CGI): This scale retains the value of the usufruct up to 23% of the value of the property in full ownership, for each period of 10 years of dismemberment (eg: 23% for 10 years, 46% for 20 years). This is a simple convention which ignores the real profitability of the property.
• Economic evaluation (Discounting cash flows): This method determines the precise market value by projecting the expected net income flows (rents less charges, or real distributive capacities) discounted at a market rate.

Which one to use? The tax administration is uncompromising: although the scale of article 669 CGI sets the rule of tax law for registration fees (donations, etc.), the purchase price of a transfer must be set according to its real economic value to reflect the market. If the economic value is greater than the tax assessment, it is this first market value which must take precedence. Undervaluing the asset would correspond to an abnormal management act for the transferee company.

The tax administration, and its Abuse of Rights Committee, track down temporary transfers of usufruct devoid of economic reality.

An operation can be reclassified as an abuse of rights (fraud of the law or fictitious act) with application of increased penalties (up to 80%) if the sole aim of the arrangement is to evade tax or if it only presents a facade legal reality.

Examples of warning signs:

1. Absence of economic rationality for the transferee company: if the company buys at a high price or takes out a complex loan for a property which will not generate sufficient income (low rental yield).
2. Circular flows: when the income from the sale price financed by the buyer goes around in circles and returns to the initial charge.
3. Overvaluation of usufruct.

It is fundamental to "document" the economic substance, that is to say to be able to demonstrate that the operation benefits the company which has invested its cash with a view to a real return on investment (positive IRR for the company).

The structuring of a temporary transfer of usufruct cannot be improvised and the support of an experienced accounting firm is essential to secure the arrangement in 2026.

The contribution of Hayot Expertise:

• Financial simulations: We mathematically compare the evaluation by article 669 of the CGI to the method of forecast economic value via DCF (Discounted Cash Flows), in order to set the convincing price of the risk-free usufruct.
• Validation of the tax arrangement: We check whether the operation is economically justified for the company to the IS to eliminate any risk of abnormal management act or abuse of rights.
• Help with declaration: Integration into your tax packages, IFI, income declarations, and rigorous implementation of the usufruct amortization table in your company's accounting.
• Coordination with your notary for the drafting of deed clauses (which pays for major repairs vs. maintenance charges according to art. 605 and 606 of the Civil Code).

Are you considering a transfer of usufruct to optimize your flows and your assets? Call on the Hayot Expertise firm in Paris to model this cutting-edge operation with total security.