How property dismemberment works

Ownership of real estate can be split into two distinct rights: usufruct (usufruit), which grants the right to use the property and collect rents, and bare ownership (nue-propriété), which represents ownership of the capital without immediate enjoyment. This separation, governed by the French Civil Code, can result from a donation — but also, and this is the focus of this article, from a deliberate purchase of bare ownership from an institutional landlord.

In the most common structure available on the French market, a developer or social housing organisation sells bare ownership of an apartment to a private investor for a fixed period — typically 15 to 20 years. The usufructuary (often a social housing body) retains the right to let the property and collect the rents. At the end of the term, the usufruct extinguishes, and the investor automatically recovers full ownership of a new or renovated property, without any further formality.

This mechanism, structured in particular through off-plan (Vefa) dismembered transactions, has expanded considerably since 2015, driven by demand from taxpayers subject to the IFI wealth tax and investors in high marginal tax brackets.

The acquisition discount: 20 to 40% depending on term

The main attraction of bare ownership is the discount applied to the acquisition price. Since the investor forgoes rental income throughout the dismemberment period, the price paid is lower than the full ownership value. This discount is calculated using the fiscal scale of Article 669 of the French General Tax Code (CGI), which determines the value of usufruct based on the age of the usufructuary, or through an economic valuation based on the discounted present value of future rents.

In practice, for a 15 to 20-year temporary dismemberment on a property in a high-demand area (Paris, Bordeaux, Lyon, Côte d’Azur), the market discount typically ranges between 30 and 40% of the full ownership value. A property worth €600,000 in full ownership can thus be acquired in bare ownership for €380,000 to €420,000.

Outside IFI, outside rental income: dual-layer tax optimisation

Bare ownership investment offers two major tax advantages that distinguish it from any other real estate vehicle.

IFI Wealth Tax exemption

Article 968 of the CGI provides that the value of bare ownership of a property whose usufruct has been transferred for consideration to a person not belonging to the same tax household does not form part of the bare owner’s IFI taxable base. Concretely, a taxpayer subject to IFI who invests €400,000 in bare ownership does not add that amount to their taxable estate. At the marginal IFI rate of 1.5% applied to estates above €10 million, the annual saving compounded over 20 years represents a considerable advantage.

No taxable rental income

During the dismemberment period, the bare owner receives no rent. They therefore declare no rental income, are not subject to social levies (17.2%) or capital income taxation. For an investor in the 45% marginal bracket plus 17.2% social charges, the tax avoided on 20 years of forgone rental income represents a significant share of the total investment value.

Zero maintenance burden

Case law and dismemberment agreements provide that the usufructuary bears all routine maintenance charges, property management fees and property tax. The bare owner bears, as a general rule, only major structural repairs within the meaning of Article 606 of the Civil Code — roof, load-bearing walls, foundations — whose probability is minimal for a new or recently renovated property.

Bare ownership on the French Riviera in 2026: market and opportunities

The French Riviera presents particularly favourable characteristics for bare ownership investment. The structurally tight rental market in Nice, Cannes, Antibes and Mougins — driven by seasonal demand and an influx of European residents — guarantees institutional usufructuaries a high occupancy rate, which secures the duration and quality of the dismemberment arrangement.

In 2026, several off-plan dismembered transactions are being marketed along the Azur corridor, primarily in Nice-Nord, Cagnes-sur-Mer and along the Mandelieu-Cannes strip. Bare ownership prices range between €4,500 and €7,500 per square metre depending on location and specifications, for properties whose full ownership value approaches €7,000 to €12,000 per square metre.

The most suitable profiles for this strategy are senior executives and business owners in the 41% or 45% marginal tax bracket, taxpayers subject to IFI wishing to diversify their real estate portfolio without increasing their taxable base, and long-term investors with a 15–20 year horizon seeking to prepare for retirement.

Key risks to consider

Bare ownership investment presents several constraints that must be analysed upfront. Illiquidity is the main risk: selling bare ownership during the dismemberment period is legally possible but economically unfavourable. The quality of the usufructuary is decisive: a financially solid social housing body provides far greater guarantees than a private structure whose sustainability is uncertain. Finally, the tenancy situation at extinction deserves particular attention: if tenants are in residence, their right to remain may complicate the recovery of occupancy rights.

A personalised analysis taking into account your tax situation, wealth objectives and investment horizon is essential before making any commitment.