definition of Bare ownership article

La Nue-Propriété / Bare ownership: definition

definition of Bare ownership article


Investing, capitalizing, preparing your future income: a concern at the heart of the reflection of many non-residents.

Historically, and even more so with the current economic climate, real estate investment in France remains the preferred choice for both French nationals and investors worldwide, aiming to build a solid legacy, protect their families, and generate additional income.

There are various ways to purchase real estate: investing in Bare Ownership through an institutional or private lessor offers numerous advantages. It’s no surprise that this approach is becoming increasingly recognized!

Last update April 1st 2022

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General Principle

The principle is straightforward, akin to a life annuity without annuity payments, but with an agreed contractual duration. Indeed, purchasing Bare Ownership or engaging in property division temporarily splits full ownership of a property.

This temporary division of ownership is legally established and proceeds through several stages.

For an investor, it involves acquiring Bare Ownership of a property either outright or on credit, while the usufruct (right to use and derive income) is simultaneously acquired by an institutional usufructuary lessor who receives income throughout the period of usufruct.

The investor regains full ownership of the property at the end of a specified period.

Thus, over a duration of 15 to 20 years, the institutional usufructuary lessor manages renting out the property and collecting rental income (which you benefit from as a discount at the time of purchase).

Upon completion of the division period, the investor regains full ownership of the property entirely free of charge. They can then fully enjoy their property: live in it, collect rental income, or sell it.


Bare ownership definition



Profitability & Taxation

The property is located in areas under high property value pressure, ensuring its appreciation and long-term returns. Thanks to a dual valuation mechanism, the investor benefits from favorable conditions at purchase (approximately 40% discount on market price depending on projects/ lower notary fees), during operation, and at resale.

Indeed, upon resale of the property at the end of the division period, capital gains tax is calculated based on the purchase price in full ownership.

Moreover, the investor retains all exemption benefits related to capital gains.

In practice, your capital gains tax will be significantly lower compared to a traditional purchase, particularly optimized or even eliminated.

It’s worth noting that maintenance of the property throughout the division period is the responsibility of the usufructuary, providing peace of mind especially for non-residents.

The property is returned in perfect habitable condition by the institutional lessor at the end of the division period.

From a legal perspective, Bare Ownership investment does not constitute a “tax loophole” and does not create any additional tax obligations. Indeed, during the division period, the property does not count towards the assets of its bare owner, thus exempt from wealth tax (IFI) and local property taxes. Moreover, as it generates no income for the investor, income tax on property income does not apply.


bare ownership value gain


Special Case of a Private Usufructuary Occupying Their Property

Property division can also occur privately with the addition of an insurance contract. It is now possible to invest in Bare Ownership of existing real estate with a private usufructuary lessor.

The principle remains the same, with specific considerations:

– An insurance contract will ensure monthly payments according to the observed situation, potentially reducing the division duration.

– The bare owner will be responsible solely for costs under Article 606 of the Civil Code concerning “walls and roof.”

For instance, facade renovation would be considered “cleaning” and not covered by the investor.


bare ownership process


In the event of the usufructuary’s death, the bare owner would regain full property ownership earlier, and may need to compensate heirs for any excessive rents received, after deducting an allowance.

If the usufructuary is still alive at the end of the division period, they may choose to retain occupancy rights until their passing, in exchange for monthly payments to the bare owner now full owner.

Alternatively, they may choose to reside elsewhere, allowing the full owner to freely sell, rent out, or occupy their property.

Thus, you make an ethical investment by enabling elderly individuals to peacefully live their final years.

Bare Ownership purchase allows for the creation of a tangible long-term asset, ideal for preparing future income or creating a solid inheritance for your children while also enhancing your savings and optimizing overall property income taxation through credit leverage.


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Content provided for informational purposes only, not replacing current regulations. Without consultation with our experts, PATRIMOLINK cannot be held responsible for any consequences resulting from the implementation of the advice and information provided in this article.