Law verified as at 5 October 2026
The rules cited in this article are those in force on that date. They may change with the Finance Act for 2027 and the presidential election of April 2027.
Dismemberment of ownership (démembrement) separates the usufruct (usufruit), which gives the use of the asset and its income, from the bare ownership (nue-propriété), which gives ownership without enjoyment. Its tax strength lies in a scale: giving only the bare ownership reduces the taxable base according to the donor’s age, without depriving the donor of the asset’s income. Its limit lies in a less well-known rule: for the IFI (French real estate wealth tax), the usufructuary is in principle taxed on the full ownership value.
The overall framework is set out on our page structuring your assets in 2026 (in French).
How are usufruct and bare ownership valued in France?
Article 669 of the French Tax Code (Code général des impôts, CGI) sets a mandatory scale for calculating registration duties, based on the usufructuary’s age on the day of the deed.
| Age of the usufructuary | Value of the usufruct | Value of the bare ownership |
|---|---|---|
| Under 21 full years | 90% | 10% |
| Under 31 full years | 80% | 20% |
| Under 41 full years | 70% | 30% |
| Under 51 full years | 60% | 40% |
| Under 61 full years | 50% | 50% |
| Under 71 full years | 40% | 60% |
| Under 81 full years | 30% | 70% |
| Under 91 full years | 20% | 80% |
| Over 91 full years | 10% | 90% |
The scale moves in ten-year bands. When a donor reaches 61, the value of the bare ownership rises from 50% to 60%: the date of the deed therefore has a mechanical effect on the cost of the gift.
A usufruct granted for a fixed term follows a different rule: it is valued at 23% of the value of the full ownership for each ten-year period, without fractions and regardless of the usufructuary’s age.
Who pays IFI when ownership is dismembered?
This is the most frequently misunderstood point. Article 968 of the CGI sets the following principle: assets subject to a usufruct, a right of habitation or a right of use granted on a personal basis are included in the usufructuary’s assets at their full ownership value.
In other words, dismemberment does not reduce the base of the real estate wealth tax: it concentrates it on the usufructuary, who bears all of it, while the bare owner bears none of it.
Article 968 does, however, provide for separate taxation, each party on the value of their rights determined under the Article 669 scale, in limited cases: the surviving spouse’s usufruct arising from certain provisions of the French Civil Code (Code civil) (Article 757, Article 1098, former Articles 767 and 1094); the sale of an asset where the seller has reserved the usufruct, the use or the habitation, when the buyer is not one of the persons referred to in Article 751 of the CGI (presumptive heirs, donees, legatees or interposed persons); and the gift or bequest of an asset to the State, a local authority or certain bodies with the donor reserving the usufruct, use or habitation. These exceptions require that the usufruct has been neither sold nor transferred free of charge by its holder.
A worked example
A couple aged 58 own a main residence worth €1,100,000 and two rental buildings valued together at €900,000. They have two children and wish to plan ahead for the transfer of the rental buildings.
Current situation, without dismemberment. The main residence benefits from the 30% allowance under Article 973 of the CGI and counts for €770,000. Net taxable real estate assets come to €1,670,000, above the €1,300,000 threshold of Article 964: the household is liable for IFI.
Gift of the bare ownership of the rental buildings. As the donors are under 61 full years, the bare ownership is valued at 50%, i.e. €450,000, split between two children and two parents: €112,500 per parent-child link. The €100,000 allowance of Article 779 leaves €12,500 taxable per link, i.e. duties of around €866 per link at the direct-line rate of Article 777, about €3,460 in total.
Effect on IFI. None. As the parents keep the usufruct, they remain taxed on the full ownership value of the buildings, under Article 968. The IFI base remains €1,670,000.
The lesson is clear: dismemberment is a tool for transferring assets, not a tool for reducing IFI for the person who keeps the usufruct.
When does the strategy really work?
- Transferring assets at reduced cost by using the Article 669 scale, while keeping the income. This is the main use, and it is sound.
- Starting the fifteen-year period of Article 784 of the CGI on a reduced base, which increases the amount that can be transferred over a lifetime.
- Removing an asset from the bare owner’s IFI base where the bare owner is the one liable, for example a child who already owns significant real estate assets.
- Acquiring in dismembered form, with the parents holding a temporary usufruct and the children the bare ownership, with a split of the price that follows the scale and financing genuinely borne by each party.
The most frequent recharacterisations
Three set-ups attract tax audits.
A gift of bare ownership financed by the donor. Where the bare owner bears no real cost and the donor keeps full control of the asset, the tax authorities may dispute whether the dismemberment is genuine.
A fixed-term dismemberment calibrated to a tax objective. The rule of 23% per ten-year period leads to significant gaps with the economic value of the usufruct. An arrangement whose term has no justification other than this gap may fall within Article L64 A of the French Tax Procedure Code (livre des procédures fiscales, LPF), which targets transactions with a principally tax-driven purpose.
Early reunification of the usufruct. Buying back the usufruct shortly after the gift of the bare ownership may be analysed as a disguised gift of the whole asset.
The line between legitimate use and abuse is discussed in our article on the limits of tax optimisation.
What dismemberment does not settle
Three questions remain open after the deed.
Allocation of costs. The usufructuary bears routine maintenance and the taxes linked to enjoyment of the asset; major repairs fall on the bare owner. An agreement may adjust this allocation, provided it does not transfer to the bare owner a cost that would in reality amount to an additional gift.
Sale of the dismembered asset. It requires the agreement of both the usufructuary and the bare owner. Where the usufruct and the bare ownership are sold together, the price is split according to the respective value of each right, unless the parties agree to carry the usufruct over to the price (Article 621 of the Civil Code (in French)). A reinvestment clause included in the deed of gift makes it possible to organise this carry-over in advance.
Governance of shares. For company shares, voting rights belong in principle to the usufructuary for decisions on the allocation of profits and to the bare owner for other decisions, unless the articles of association provide otherwise. Drafting the articles of association therefore comes before the gift.
Key points
- The Article 669 scale makes the taxable base vary in ten-year bands of the donor’s age: the date of the deed matters.
- For IFI, the usufructuary is taxed on the full ownership value, except in the limited cases of Article 968.
- Dismemberment serves the transfer of assets; it does not reduce IFI for the person who keeps the usufruct.
A dismemberment is decided in light of your assets as a whole: IFI, transfer to heirs, income, possible relocation abroad. Our page tax lawyer in Paris explains how the firm assists you with these choices.
FAQ
How is the value of bare ownership calculated in France?
Under the mandatory scale of Article 669 of the CGI, according to the usufructuary’s age on the day of the deed: 50% if under 61 full years, 60% if under 71 and 70% if under 81.
Does dismemberment allow you to escape IFI?
No. Article 968 of the CGI taxes the usufructuary on the full ownership value of the asset. Separate taxation is allowed only in limited cases, in particular the surviving spouse’s statutory usufruct.
What happens when the usufructuary dies?
The usufruct ends and the bare owner becomes full owner, with no additional transfer duties on this reunification. This is the main benefit of a gift of bare ownership.
Can company shares be dismembered?
Yes, and the Article 669 scale applies in the same way to calculate the duties. The allocation of voting rights and of the right to dividends is set in the articles of association and, where appropriate, in a dismemberment agreement.
Is a temporary usufruct tax-efficient?
It is valued at 23% of the value of the full ownership for each ten-year period. This flat-rate rule creates gaps with the real economic value, which exposes arrangements whose term has no other justification.
Structuring a transfer through dismemberment
We calculate the cost of the gift according to the donor’s age, the effect on the IFI base and the clauses to include in the deed. See our article on the real cost of a gift (in French), the one on 70% reinvestment (in French), the one on the estate of a non-resident, and deciding before the budget vote (in French). Every situation is different and deserves a dedicated analysis.
Official sources
- Article 669 of the French Tax Code (CGI), scale for usufruct and bare ownership – Légifrance (in French)
- Article 968 of the French Tax Code (CGI), IFI and dismembered assets – Légifrance (in French)
- Article 964 of the French Tax Code (CGI), IFI threshold – Légifrance (in French)
- Article 973 of the French Tax Code (CGI), 30% allowance on the main residence – Légifrance (in French)
- Article 779 of the French Tax Code (CGI), allowances – Légifrance (in French)
- Article 784 of the French Tax Code (CGI), recall of earlier gifts – Légifrance (in French)
- Article L64 A of the French Tax Procedure Code (LPF), transactions with a principally tax-driven purpose – Légifrance (in French)
This article sets out the law for general information purposes, verified on the date of publication. It does not constitute legal advice. Every situation is different and deserves a dedicated analysis. Content compliant with the professional conduct rules of the legal profession.
