Bare ownership in Paris: the patient investment that pays off

Buying an apartment in Paris at a 35% discount, with no property management, no property tax, no routine co-ownership charges, and removing the asset from your IFI wealth tax base. The proposition sounds too good to be true. Yet it is perfectly legal and codified in the Civil Code for more than two centuries. This is the dismemberment of ownership, and its investor-facing aspect: bare ownership.

At Home Select, bare ownership is not our core business. We are property hunters, not dismemberment programme promoters. But we regularly receive questions from investors about this mechanism, and we assist clients coming out of dismemberment when they recover full ownership and wish to optimise the rental or resale. This factual analysis aims to help everyone determine whether bare ownership matches their situation.

The principle: buying the walls, not the use

Dismemberment separates ownership into two distinct rights. The bare owner holds the property: the walls, the land, the structure. The usufructuary holds the right to use the property and collect income from it for a set period. In bare ownership programmes structured for investment, the usufructuary is typically a social housing provider (Paris Habitat, ICF Habitat, CDC Habitat, 1001 Vies Habitat) or an institutional investor who operates the property as social or intermediate rental housing for 15 to 20 years.

At the end of the dismemberment, the usufruct automatically expires. The bare owner recovers full ownership with no additional formality, no additional transfer duties, no further payment to the former usufructuary. The property returns to their portfolio at its full market value: that of an apartment free of any encumbrance.

The acquisition discount reflects the deprivation of enjoyment during the dismemberment period. For a 15-year usufruct, the bare owner pays approximately 60 to 65% of the full ownership value. For 20 years, the discount reaches 35 to 40%. These scales are governed by the tax authorities (Article 669 of the General Tax Code for life-interest dismemberments, economic valuation for fixed-term dismemberments) and vary depending on the programme, the operator and market conditions.

The mechanism is simple to understand, but its wealth implications are profound. The investor receives no income during the dismemberment period, pays no routine charges (maintenance, property tax and co-ownership charges are borne by the usufructuary), declares no rental income, and pays no tax on the property. It is a purely wealth-building investment: a silent, tax-optimised capitalisation.

Simulation: a one-bedroom apartment of 40 m² in the 13th

Take a representative and realistic case. A one-bedroom apartment of 40 m² in the 13th arrondissement, in a new or near-new programme, offered in bare ownership with a 15-year usufruct held by a recognised social housing provider.

The full ownership value of the property is estimated at 344,000 euros (8,600 euros/m², average price for the 13th in 2026). The bare ownership price is set at 220,000 euros, or 64% of the full ownership value: a discount of 124,000 euros. Notaire fees for a new build (VEFA) amount to 2.5%, or 5,500 euros. The total investment is 225,500 euros.

For 15 years, the bare owner receives no income and bears no charges. Zero rent, zero routine co-ownership fees, zero property tax, zero landlord insurance, zero management, zero rental income tax declarations. The property is rented by the social housing provider to income-qualified tenants. Routine maintenance is entirely handled by the usufructuary, in accordance with Articles 605 and 606 of the Civil Code, which allocate major structural repairs (walls, vaults, roof) to the bare owner and routine maintenance to the usufructuary.

At the end of 15 years, in 2041, the bare owner recovers full ownership. Assuming a conservative appreciation of 2% per year, below the long-term historical Paris average, the property would be worth 463,000 euros. The gross wealth gain is 237,500 euros (463,000 minus 225,500), an annualised return of 4.9% per year. This return is entirely composed of latent capital gain, with no management effort, no ongoing taxation, and no tenant risk.

With a 2.5% annual appreciation assumption, the terminal value reaches 497,000 euros and the annualised return rises to 5.4%. At 3% per year (an optimistic but historically consistent assumption for Paris), the value climbs to 536,000 euros and the annualised return to 5.9%.

These figures must be put into perspective with the main risk: if property prices stagnate for 15 years, the gain is limited to the acquisition discount (124,000 euros on 225,500 euros invested, an annualised return of 2.8%). That is not negligible, but it is significantly less attractive than a traditional rental investment that generates cash flow even when prices are flat.

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Tax advantages: IFI, inheritance, capital gains

IFI exemption is the primary tax advantage of bare ownership and often the main motivation for wealthy investors. When the usufruct is held by a social housing provider under a fixed-term dismemberment, the bare ownership is excluded from the IFI (Impôt sur la Fortune Immobilière) tax base for the entire duration. It is the usufructuary who declares the property value in their own portfolio.

For an IFI taxpayer holding 2 million euros in taxable property, removing 220,000 euros from the tax base represents an annual saving of 1,100 to 2,200 euros depending on the marginal IFI bracket (0.5% between 800,000 and 1,300,000 euros, 0.7% between 1,300,000 and 2,570,000 euros, 1% above). Over 15 years, the cumulative saving reaches 16,500 to 33,000 euros: a significant return supplement that pushes the total annualised return above 5.5% for substantial portfolios.

The inheritance strategy is the second tax lever. Buying in bare ownership and transferring it during one’s lifetime allows the gift of a property whose fiscal value is reduced by 35 to 40%. A property acquired at 220,000 euros in bare ownership can be transferred at that value through a donation: gift duties are calculated on 220,000 euros, not 344,000 euros. The usufruct will expire naturally at the scheduled term, and the beneficiary will recover full ownership without additional inheritance tax. For a parent with a marginal income tax rate of 41% who wishes to pass assets to their children, the combination of bare ownership plus donation offers optimisation that is hard to match.

The capital gains tax treatment upon resale is also favourable, and this point is often overlooked. The acquisition price used for capital gains calculation is not the bare ownership price (220,000 euros) but the full ownership price at the time of purchase (344,000 euros), which considerably reduces the taxable capital gain. Length-of-ownership allowances apply from the date of bare ownership acquisition, not from the end of the dismemberment. After 22 years of ownership, income tax exemption is total (social levies exempted after 30 years).

The drawbacks: zero income, low liquidity, handover risk

Bare ownership is not a rental investment. For 15 to 20 years, the bare owner receives no income whatsoever. The investment is purely wealth-building: it aims at building or growing a property portfolio, not generating cash flow. This fundamental reality immediately rules out investors who need supplementary income or who rely on rents to repay a mortgage.

Financing through a loan is possible but constrained. Banks agree to finance bare ownership with stricter conditions than for traditional rental investment: 30 to 40% personal contribution (versus 10 to 20% for rental), monthly payments entirely borne by the borrower since no rent offsets them, and interest rates sometimes marked up by 0.1 to 0.2 points. The investor must demonstrate sufficient borrowing capacity from employment income alone, with no consideration of the acquired property.

Liquidity is the second major weakness. Reselling bare ownership before the dismemberment ends is theoretically possible: a secondary market exists. But it is narrow, potential buyers are few (only investors with a similar wealth profile are interested), and the resale discount can exceed the initial acquisition discount because the secondary buyer takes over an ongoing dismemberment with a shorter residual duration and therefore a smaller discount. In practice, bare ownership should be considered a locked investment for the full duration of the dismemberment.

The condition of the property upon handover is a tangible risk. After 15 to 20 years of social rental operation, the interior may be degraded. Dismemberment agreements include maintenance obligations for the usufructuary and a handover inspection, but reality sometimes falls short of contractual commitments. Walls, floors, sanitary fixtures and kitchen suffer normal but real wear over two decades of occupation. The bare owner should budget a renovation allowance of 8,000 to 15,000 euros at handover to bring the property up to market standards, a cost that reduces the net wealth gain accordingly.

The choice of usufructuary is therefore decisive. An institutional social housing provider (Paris Habitat, CDC Habitat) offers guarantees of financial solidity and maintenance quality that small private operators cannot match. The track record of the dismemberment operator (Perl, Fidexi, iSelection) also deserves careful scrutiny: number of programmes brought to term, observed handover quality, feedback from exiting investors.

Who is bare ownership for?

The typical bare ownership investor has several combined characteristics. A marginal income tax rate of 41% or 45%, because the absence of rental income means zero additional taxation, an advantage that grows with the tax bracket. An existing property portfolio, often subject to IFI, that benefits from removing an asset from the tax base. A primary residence already purchased, since bare ownership cannot be occupied before the dismemberment ends. And sufficient financial capacity to immobilise 200,000 to 300,000 euros for 15 to 20 years without receiving any income.

Bare ownership is particularly well-suited for retirement planning. A 45-year-old executive who buys in bare ownership with a 20-year usufruct recovers full ownership at 65, precisely when they can either live in the property, rent it out to supplement their pension, or sell it to release capital. The timing is perfect, provided they have sufficient income to sustain the savings effort during the remaining twenty years of working life.

Family wealth transfer strategies constitute the third use case. Parents who purchase bare ownership and donate it to their children optimise twice over: reduced gift duties (tax base of 60-65% of full ownership value) and the creation of a Paris property asset for the next generation that will be fully available in 15 to 20 years.

Bare ownership vs. traditional rental: over what horizon to compare

The comparison between bare ownership and traditional rental investment only makes sense over an identical 15 to 20-year horizon. Over this period, a studio rented under the LMNP scheme in the 13th generates a cumulative return (net-net rent plus capital appreciation) of approximately 80 to 100% of the initial capital invested. Bare ownership, over the same period, generates a return of 75 to 140% depending on the rate of price appreciation, entirely in capital gains and with no management burden whatsoever.

Bare ownership wins if prices rise at more than 2% per year, which is the historical case in Paris. Traditional rental investment wins if prices stagnate or fall, because the rental yield provides a floor independent of price appreciation. Bare ownership also wins on the tax front for high earners (marginal rate 41-45%, IFI) thanks to the absence of taxable income and IFI exemption.

Our recommendation at Home Select: bare ownership as a complement to an existing rental portfolio, not as a first investment. The first investment should provide the experience of rental management, dealing with tenants, co-ownership, taxation, which forms the foundation of any wealth strategy. Bare ownership comes next, as an optimisation tool for an already experienced investor.

Programmes available in Paris and the Île-de-France

The bare ownership market within Paris remains a niche. Programmes are few (3 to 5 per year within Paris), concentrated in the 13th, 14th, 15th and 19th arrondissements, the areas where social housing providers are most active and where new construction is still possible. Bare ownership prices range from 5,000 to 7,000 euros/m² depending on the arrondissement and the usufruct duration.

In the Île-de-France region, supply is considerably more abundant. Boulogne-Billancourt, Issy-les-Moulineaux, Montreuil, Saint-Ouen, Bagneux, Villejuif and the municipalities served by the Grand Paris Express concentrate the majority of programmes. Bare ownership prices in the inner suburbs range from 3,000 to 5,000 euros/m², with appreciation prospects sometimes exceeding those of central Paris. The effect of new Grand Paris Express stations on surrounding prices is historically documented (5 to 15% increase within an 800-metre radius in the 3 to 5 years following opening).

The property hunter’s advice

Our role in a bare ownership investment is more limited than in traditional rental investment, since programmes are marketed by specialised operators and the choice is more about the programme and operator than the individual property. Nonetheless, our 15 years of expertise in the Paris market enable us to assess whether the proposed price is fair relative to the actual full ownership market, the quality of the location and its 15-to-20-year appreciation potential, and the operator’s reliability. On a 220,000 euro investment, a 10% misjudgment on pricing represents 22,000 euros, an amount that justifies an informed opinion.

We also step in at the end of the dismemberment, when the investor recovers full ownership and wishes to optimise the rental or resale. That is where our support takes on its full value: transforming a dormant wealth asset into a high-performing rental income source, at the best possible return.

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