Dismemberment of ownership
The division of ownership rights between usufruct (right to use and collect income) and bare ownership (right to eventually dispose of the property). This structure is used to optimise estate planning, reduce IFI liability, or acquire a property at a reduced price. The broker financing a bare-ownership purchase must explain to the bank that the property generates no rental income during the dismemberment period.
Key points
- Usufruct covers use and income from the property; bare ownership covers future disposal rights.
- A key estate-planning tool: reduces IFI liability and the taxable base of gifts.
- Full ownership is automatically reconstituted when usufruct expires at no cost.
- Financing a bare-ownership purchase requires adapted credit analysis with no immediate rental income.
Frequently asked questions
How does dismemberment of ownership reduce IFI liability?
It is the usufructuary who declares the full-ownership value of the property for IFI purposes, not the bare owner. A parent who gives bare ownership to their children therefore removes the corresponding value from their own IFI base from the date of the gift, while retaining use of the property.
What are the usufructuary's obligations towards the bare owner?
The usufructuary must use the property responsibly, bear routine running costs and ordinary maintenance, pay property taxes, and return the property in good condition when the usufruct ends. Major repairs are in principle the bare owner's responsibility, unless agreed otherwise.
How should the broker explain dismemberment to a bank financing a bare-ownership purchase?
The broker presents the structure by detailing the dismemberment term, the estimated future full-ownership value, and the absence of rental income during the period. They highlight the long-term wealth-building strength and propose offsetting the lack of rental income with other income sources or guarantees.
In practice
An institutional landlord sells the bare ownerships of a building to private buyers while retaining usufruct for 20 years. The buyers pay around 60% of market value and recover fully renovated units at the end of the period without paying any additional costs.
Official sources
- Usufruct, bare ownership, full ownership: differences · Service-Public.gouv.fr
- Housing and financing information · ANIL
- Mortgage credit (official guide) · Service-Public.gouv.fr