A private investor (or a company) acquires a well-situated quality property for 50 to 60 % of its value, in bare ownership. At the same time, the usufruct is acquired for a fixed term (15 to 17 years) by a social landlord who rents out the housing to households subject to conditions on income*. Over the whole period, the landlord is responsible for all costs, maintenance and taxes. At the end of the usufruct, the investor – you- automatically and free of charge recovers full ownership of your property, maintained and renovated.
*65% of French households are eligible.
This type of investment is based on the dissociation in property law, for a contractual period of 15 to 20 years, between the law of usage (usufruct) and the law on capital (bare ownership property). Articles 578 to 624 from the French 1804 Code Civil.
The advantages of a bare ownership property
Invest in a prime location: properties are based in the most sought after location: Paris (Levallois, Versailles, Courbevois), French Riviera (Cannes, Antibes, Nice) , cities like Lyon, Annecy, Strasbourg.
Maximize your investment capacity: Finance only 50 to 60% of the property value, with no risk of sacrificing on quality.
An investment with no hidden expenses or risks: All rental associated risks are eliminated; maintenance and renovation costs are the responsibility of the institutional landlord.
- Income Tax: no rent, no income tax. Furthermore, you can deduct your loan interest to existing or future property-derived income and therefore obtain savings on income tax and social contributions.
- Weath Tax (ISF) : non imposition on bare ownership property owners . The result is a net wealth tax saving.
- Property Tax: paid by the usufructary
- Capital Gain Tax: Total exemption from capital gain tax if the property is sold after 30 years
Exit Strategy: No minimum duration of ownership is required. At any time, you can sell the property bare and keep the tax advantages acquired. At the end of the operation, it is up to you whether you sell, rent or occupy the property. The ENL Law of July 2006 provides that leases signed by the usufructary are automatically terminated on the day the usufruct expires.
Frequently Asked Questions – please read our dedicated section FAQ.