In summary…
Upon death, a €400,000 apartment costs a child €58,194 in inheritance tax. Gifting the bare ownership at age 55 reduces the cost to €18,194, because Article 669 of the French General Tax Code (CGI) only taxes 50% of the value at that age. At age 75, the same gift costs €34,194. The parent retains the right to use the property and receive the rental income, and the usufruct merges with the bare ownership without inheritance tax upon their death.
1. The scale in Article 669
When bare ownership is given away while retaining the usufruct, only the bare ownership is taxed. Its value depends on the usufructuary's age on the day of the gift:
| Age of the usufructuary | Usufruct | Bare ownership |
|---|---|---|
| Under 21 years old | 90% | 10% |
| Under 31 years old | 80% | 20% |
| Under 41 years old | 70% | 30% |
| Under 51 years old | 60% | 40% |
| Under 61 years old | 50% | 50% |
| Under 71 years old | 40% | 60% |
| Under 81 years old | 30% | 70% |
| Under 91 years old | 20% | 80% |
| 91 years and older | 10% | 90% |
Each ten-year waiting period adds 10 points to the taxable value.
2. Why usufruct costs nothing upon death
Upon the death of the usufructuary, the usufruct ends and merges with the bare ownership. Article 1133 of the French General Tax Code (CGI) stipulates that this merger does not give rise to any tax: the child becomes the full owner without any additional rights. This is the principle of... division of ownership.
3. Concrete example
Situation. A 55-year-old parent, sole owner of a €400,000 apartment which he rents out. One child.
Issue. Upon his death, the apartment is taxed on its full value: €300,000 after the €100,000 allowance, i.e. €58,194 in taxes.
Strategy. He gives the bare ownership at age 55 and retains the usufruct. Taxable value: 50 % of €400,000, i.e., €200,000.
Result. €100,000 taxable after allowance, €18,194 in duties, instead of €58,194. The same gift at age 75 would cost €34,194.
For two people, the difference is even more pronounced: a couple aged 55, each owning their property equally, gift the bare ownership of their half. €100,000 per parent, entirely covered by the allowance: €0 in taxes.
4. What causes the strategy to fail
Wait. Each decade increases the taxable base by 10 points of the property's value.
Do not plan the next steps. A future sale requires the agreement of the usufructuary and the bare owner: the deed of gift may stipulate the fate of the proceeds.
Forget about the fees. Donating real estate requires a notary and incurs deed fees, which must be factored into the calculation.
5. The additional levers
The €100,000 allowance is renewed every fifteen years: a first donation of bare ownership can be followed by a second. The same mechanism applies to shares in SCIs or SCPIs, valued according to the same scale.
Frequently asked questions
Do the rents remain mine?
Yes. The usufructuary receives the rents and remains taxed on these revenues.
Who pays the IFI (French wealth tax)?
In the case of a gift with reservation of usufruct, the usufructuary remains liable for IFI on the full ownership of the property (article 968 of the CGI).
What happens if my child dies before me?
The deed may include a conventional return clause: the property then reverts to the donor, without transfer taxes.
Do you want to calculate the value of donating the bare ownership of your property, at your age? Book an appointment : we compare the cost today, in ten years and at the time of inheritance.
