Usufruct
A real right entitling its holder to use a property belonging to another (the bare owner) and to collect its income (fruits), without the power to dispose of it. It can be life-long (lasting until the usufructuary's death) or temporary. In real estate it is often created by a gift with reservation of usufruct to transfer a property while retaining its rental income. It is included in the usufructuary's IFI tax base.
Key points
- The usufructuary collects rents and bears routine maintenance costs.
- It can be lifelong (until death) or temporary (for a contractually set term).
- The value of usufruct decreases with the usufructuary's age according to the tax scale.
- Usufruct is included in the usufructuary's IFI base, not the bare owner's.
Frequently asked questions
How is usufruct used in an estate-planning strategy?
Parents give the bare ownership of their property to their children while retaining usufruct. This reduces the taxable base of the gift since only bare ownership is valued at the date of transfer, and the parents continue to receive rental income or live in the property until death.
What is the difference between a lifelong usufruct and a temporary usufruct?
A lifelong usufruct ends at the usufructuary's death, making its duration uncertain. A temporary usufruct, commonly used in institutional structures such as bare-ownership sales with a social landlord, ends on a predetermined date, enabling precise financial planning.
How does the bank treat usufruct when assessing a property loan?
If the borrower is the bare owner, the bank notes the absence of rental income and may be more restrictive about financing. If the borrower is the usufructuary, the rents collected are generally included in the income used to calculate the debt-to-income ratio, subject to the lender's policy.
In practice
A father gives the bare ownership of his rental flat to his two children while retaining usufruct. He continues to collect the rents until his death, at which point the children automatically become full owners with no additional inheritance costs.
Official sources
- What is usufruct? · Service-Public.gouv.fr
- Usufruct, bare ownership, full ownership: differences · Service-Public.gouv.fr
- Housing and financing information · ANIL