Disaggregation of ownership and IFI: who declares what, the usufructuary or the bare owner?

For the purposes of the French wealth tax (IFI), the usufructuary declares the divided property at its full ownership value. The bare owner, in principle, has nothing to declare. Three exceptions divide the tax liability between the two: the surviving spouse's legal usufruct, the sale of bare ownership to certain third parties with a reserved usufruct, and gifts or bequests to the State and certain organizations with a reserved usufruct.

This page provides the general rules, based on the administrative guidelines in effect as of October 17, 2026: the BOFiP (version of June 8, 2018) and the instructions for the 2042-IFI 2026 tax return. It does not address debts owed by the usufructuary, the situation of a non-resident usufructuary or bare owner, or the specific sections of the tax return. The threshold, tax brackets, the 30% allowance, and debts are detailed on the page concerning the IFI for residents. For a definitive ruling, consult the text of Article 968 of the French General Tax Code (CGI).

The starting rule

Article 968 of the French General Tax Code (CGI) places assets subject to a usufruct "in the usufructuary's estate at their full ownership value," according to the BOFiP (Official Bulletin of Public Finances). The bare owner, in return, has "nothing to declare for wealth tax (IFI) purposes," subject to the exceptions listed below.

Three clarifications from the BOFiP:

• Fraction. If the usufruct only covers part of the property, only the same fraction of the full ownership value is retained.
• Targeted assets. The rule targets assets subject to IFI, i.e. real estate and the shares representing it, held by the taxpayer or a member of his household.
• Threshold. The IFI concerns people whose net taxable real estate assets exceed €1,300,000 on January 1, 2026 (notice 2042-IFI 2026).

Who declares what, situation by situation?

The "share" is calculated using the age-based scale for the usufructuary, presented below.

The three exceptions

In each case, the tax liability is divided between the usufructuary and the bare owner according to Article 669 of the French General Tax Code (CGI). The instructions for the tax return indicate that each party declares their share of the property's value and that valuation based on the usufructuary's age is mandatory.

1° The split of ownership results directly from the law. The BOFiP (Official Bulletin of Public Finances) cites the legal usufructs of the Civil Code, notably that of the surviving spouse. The list is exhaustive: other forms of split of ownership are not included.

2° Sale of the bare ownership, usufruct reserved by the seller. The exception applies if the bare ownership is not transferred to a person covered by Article 751 of the French General Tax Code (CGI). According to the French Official Tax Bulletin (BOFiP), this includes presumptive heirs or their descendants, donees, legatees, and persons deemed to be intermediaries. A sale that disguises a gift does not benefit from this exception.

3° Gift or bequest to the State and to certain organizations, usufruct reserved by the donor. According to the BOFiP (Official Bulletin of Public Finances), only the usufructuary right then becomes part of the usufructuary's estate. The list of beneficiaries should be checked with the BOFiP and the instructions for the tax return before making any decision.

Common condition. These exceptions are valid provided that the usufruct "is neither sold nor transferred free of charge by its holder" (BOFiP).

Cases where the usufructuary remains taxed on the full ownership

The BOFiP treats the following cases as falling under the general rule, without allocation of taxation:

• Gift of bare ownership with retained usufruct. The donor remains taxable on the full ownership, even if the donee subsequently sells the bare ownership.
• Conventional usufruct or usufruct arising from a marriage contract. The BOFiP (Official Bulletin of Public Finances) cites usufruct as provided for in Article 1094-1 of the Civil Code, marriage contracts, and the testamentary allocation of the usufruct of all assets to the surviving spouse when there are descendants. The explanatory note specifies: when the usufruct is acquired by will or by gift between spouses, only the usufructuary is taxable on the full ownership value.
• Usufruct fixed by agreement between heirs at a level higher than that of the law. He does not benefit from the exemption.
• Gift with a conventional return clause and a prohibition on alienation or mortgage. According to the BOFiP, the situation of the donee is comparable to that of a usufructuary, in that he has the use of the property: he declares the property for its full ownership value.

Right of use or habitation, loan for use

For the purposes of the French wealth tax (IFI), the BOFiP (Official Bulletin of Public Finances) treats the right of use or habitation in the same way as usufruct. The instructions require determining the taxable value "according to the same principles as for usufruct." This page does not provide any percentages for these rights.

Loans for use (commodatum) do not fall within the scope of Article 968. The owner of the loaned property declares it, subject to control by the administration.

Debts related to a property with divided ownership

The 2042-IFI 2026 information sheet provides an example: debts relating to assets held in usufruct or fractional ownership, but included in full ownership within the taxable estate of the usufructuary, "are not deductible for the bare owner." The deduction of debts from the usufructuary's perspective is not addressed here; this should be verified in the information sheet before completing the tax return.

Arguments against Article 968

According to the BOFiP (Official Bulletin of Public Finances), the tax authorities can implement the tax avoidance procedure (Article L. 64 of the French Tax Procedures Code) against arrangements whose sole purpose is to allow taxpayers to evade Article 968. It cites usufruct companies and fictitious waivers as examples. The current conditions for tax avoidance should be verified in the text of Article L. 64.

The scale for the three exceptions

In the three exceptional cases, the distribution follows the scale in Article 669 I of the French General Tax Code (CGI). The BOFiP (Official Bulletin of Public Finances) and the explanatory notes give the same percentages. The page on gifts with reservation of usufruct details the principle.

If the usufructuary's age falls exactly on one end of the table, the relevant line should be checked with the source before declaring.

Numerical example (fictitious profile)

Situation. Ms. Verdier is 67 years old. She owns an apartment worth €900,000 outright and other real estate with a net taxable value of €700,000. Assumptions: she is a tax resident of France and her tax household has no other members; the apartment and her other assets are held directly, without a company; the apartment is not her primary residence and has no outstanding debts; she owns no other assets subject to the French wealth tax (IFI). Her son, Antoine, is her heir.

Issue. She gives Antoine the bare ownership of the apartment and retains the usufruct. Who declares the apartment for wealth tax purposes?

Strategy. Applying the rule: a gift of bare ownership with retained usufruct does not fall under the exception for sales. Ms. Verdier remains taxable on the full ownership (BOFiP).

Result.

The €1,300,000 threshold has been exceeded (as per the above assumptions). Using the tax brackets published on impots.gouv.fr, Ms. Verdier's IFI (French wealth tax) is €2,500 on the portion between €800,000 and €1,300,000 (0.50 per %), plus €2,100 on the portion between €1,300,000 and €1,600,000 (0.70 per %), totaling €4,600. The tax discount does not apply at this level.

Another case, to compare the reading of the rule. Additional assumptions: the sale is genuine and made at the price actually paid, without any disguised gift; the buyer is not a person covered by Article 751 of the French General Tax Code (CGI); the usufruct is neither sold nor subsequently transferred; the proceeds are not reinvested in taxable real estate. If Ms. Verdier had sold the bare ownership under these conditions, retaining the usufruct, exception 2 would apply. At age 67, the "under 71 years of age" line yields 40 % for the usufruct and 60 % for the bare ownership: €360,000 for her and €540,000 for the buyer. Her net taxable assets would be €1,060,000, below the threshold of €1,300,000. The buyer would declare €540,000 for this property, in addition to his own assets.

This comparison illustrates who is saying what. It does not recommend a sale, which has its own consequences, not addressed here. This profile is fictitious. The figures are based on the stated assumptions and do not predict any results for your specific situation.

What changes depending on your situation

• The origin of the split of ownership : law, gift, sale, will, marriage contract.
• The person to whom the bare ownership was given or sold : heir, donee, third party, organization.
• The age of the usufructuary.
• Property-related debts and the person who supports them.
• Your tax residence : the case of a non-resident usufructuary or bare owner is not dealt with here.

The rule depends on your situation. No results are guaranteed.