Bare Ownership Donation: The Window Not to Miss Before Age 70
Art. 669 CGI scale, flat tax at 31.4% and frozen allowances — why 2026 may be your last optimal year
- Donating bare ownership before age 70 reduces the taxable base to 60% of the asset’s value — versus 70% after that age (Art. 669 CGI)
- On a €800,000 estate, crossing the age-70 threshold without acting costs between €12,000 and €24,000 in additional gift taxes
- In 2026, the abolition of PER deductibility after age 70 (Finance Act 2026) and the flat tax at 31.4% reinforce the case for a split-ownership donation
- At the death of the life tenant, full ownership passes to the bare owner with no additional tax due (Art. 1133 CGI) — regardless of any appreciation
- The €100,000 allowance per child resets every 15 years: planning from age 55–60 allows two donation rounds in the most favourable bracket
Wealth is not transmitted spontaneously on favourable terms. It is transmitted with method, at the right time. Among the tools available under French civil law, the donation with life usufruct reserved ranks among the most powerful — and one of the most misunderstood in its time dimension. The scale set out in Article 669 of the French Tax Code (CGI) creates a hierarchy of opportunity depending on the donor’s age. Understanding this mechanism means understanding why acting before age 70 makes a measurable difference.
Split Ownership in Three Minutes
Full ownership encompasses three distinct rights: usus (the right to use the asset), fructus (the right to receive its income — rent, dividends, interest) and abusus (the right to dispose of it). A dismemberment separates these rights between two parties: the life tenant (usufruitier), who retains usus and fructus, and the bare owner (nu-propriétaire), who holds abusus but can only exercise it upon the life tenant’s death.
In a donation with reserved usufruct, the parent donates bare ownership to their children while retaining the usufruct for life. They therefore continue to receive all income from their investments (rent from property, dividends from a securities portfolio, income from real estate investment trusts) while organising, as of today, the transfer of their estate at a lower tax cost.
The benefit is twofold: gift taxes are calculated on the value of the bare ownership only — a fraction lower than the full ownership value — and upon the donor’s death, the children recover full ownership without paying a single euro in additional tax, whatever capital gain has accumulated in the interim.
Art. 669 CGI Scale: Age 70, the Dividing Line
The value of bare ownership — and therefore the taxable base for gift tax — depends on the life tenant’s age at the date of donation. Article 669 of the CGI sets a scale by ten-year brackets. The younger the donor, the higher the value of the usufruct and the lower the bare ownership fraction, reducing the taxable base accordingly.
The 61–70 bracket represents the last window where the gap between taxable value and real value remains significant while still being consistent with the practical reality of most clients’ estate planning timelines. Waiting until age 71 raises the taxable base by 10 percentage points in a single step.
In figures: on an asset valued at €800,000 donated to two children, the €100,000 allowance per child absorbs a large portion of the base. Yet what remains taxable differs materially by age. Before 70, the bare ownership base is €480,000; after 70, it rises to €560,000. After allowances, the difference in taxable base reaches €80,000, generating an additional tax liability of €12,000 to €24,000 depending on the applicable marginal rate.
« Estate transmission does not tolerate improvisation. Every year of inaction after age 65 is a year in which the fiscal cost of that transfer quietly rises. »
Benjamin Cohen, Riviera Wealth Management
What Changes in 2026: Three Reasons to Act This Year
The 2026 fiscal environment adds three further arguments in favour of the split-ownership donation strategy.
Flat Tax at 31.4%
A 1.4-point increase in the CSG brings the flat tax on securities account investment income (dividends, capital gains) to 31.4% as of 1 January 2026. Retaining usufruct of a securities portfolio allows control over this taxation by modulating distributions year by year.
PER: Deductibility Abolished After 70
The 2026 Finance Act abolishes the income tax deductibility of contributions to a PER (individual pension plan) for subscribers over the age of 70. As this optimisation tool disappears, the split-ownership donation becomes the preferred alternative for reducing the IFI (wealth tax) base and organising succession.
Frozen Allowances Until 2028
Inheritance and gift tax allowances (€100,000 per child) and the rate schedule will not be uprated before 2028. In real terms, their value erodes each year with inflation — an additional reason to act in 2026 rather than 2027 or 2028.
Which Assets to Split? The Efficiency Hierarchy
Not all assets lend themselves equally well to dismemberment. The effectiveness of the structure depends on the nature of the income generated, the potential for capital appreciation, and the ease of administering the asset under divided ownership.
| Asset | Income retained by life tenant | IFI benefit | Complexity |
|---|---|---|---|
| SCPI (French REITs) | Quarterly distributions | Yes — bare ownership exits IFI base | Low |
| Rental property | Full rental income | Yes — bare ownership exits IFI base | Moderate |
| Securities portfolio | Dividends, bond coupons | No (financial assets outside IFI scope) | Moderate |
| Holding company shares | Dividends distributed | Partial, depends on underlying assets | High |
| Life insurance (co-subscription) | Annuities or partial surrenders | Not applicable | Moderate |
French real estate investment trusts (SCPI) occupy a prime position in this strategy: they generate regular income that the life tenant continues to receive, while the unit value — potentially rising over the long term — is transferred at a reduced tax cost. For real estate assets subject to the IFI, the dismemberment offers an additional benefit: bare ownership transferred to the children exits the parent’s IFI base, leaving in the parent’s estate only the usufruct value — itself calculated according to the same Art. 669 scale.
Case Study: Sophie and Pierre, Age 67, €350,000 in SCPI Units
Sophie and Pierre own SCPI units valued at €350,000, generating a 4.5% annual yield (€15,750 per year). They have two adult children. Below is the quantified impact of donating the bare ownership of these units to their two children in equal shares.
Result: Sophie and Pierre transfer €350,000 of wealth today for approximately €1,000 in gift tax. They retain their full €15,750 in annual income. Upon the death of the last surviving spouse, the children recover full ownership without paying a single additional euro — even if the units have reached €500,000 by then. Without this strategy, the same €350,000 transferred at death in full ownership would generate inheritance tax of approximately €44,000 to €60,000 depending on the future valuation.
The €100,000 allowance per child resets every 15 years. If Sophie and Pierre had already donated at age 55, a second round of donations is possible from age 70 — provided they act before that threshold to preserve the 60% bare ownership rate.
- The 61–70 bracket is the last window where bare ownership represents only 60% of taxable value — each year beyond 70 adds 10 to 20 percentage points to the taxable base
- The flat tax at 31.4% and the abolition of PER deductibility after 70 (Finance Act 2026) strengthen the appeal of the split-ownership donation as a wealth optimisation tool
- Full ownership reconstitutes tax-free at the life tenant’s death — regardless of the capital gain accumulated between donation and death
- SCPI units and rental property are the most suitable assets: income retained by the life tenant, IFI reduced, transfer fiscally optimised
- Planning from age 55–60 allows two rounds of donations in the most favourable bracket, thanks to the 15-year allowance reset
This document is provided for informational purposes only and does not constitute investment advice, a personalised recommendation, or an offer to buy or sell financial products. Past performance is not indicative of future results. All investments carry risk, including the risk of capital loss. The information contained in this article reflects Riviera Wealth Management’s analysis as of the date of publication and is subject to change. Riviera Wealth Management is an independent financial investment adviser (CIF), registered with ORIAS and a member of CNCGP.
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