Updated: August 2026
Summary
A gift with split ownership consists of giving the bare ownership of a property while retaining the usufruct, i.e. the right to live in it or receive income from it.
It allows you to pass assets on to your children while continuing to benefit from the property during your lifetime.
The taxable base is reduced according to the donor's age at the time of the gift, which reduces the amount of gift tax payable compared with a gift of full ownership.
Tax allowances between parents and children are renewed every 15 years, making it possible to spread the transfer of assets over time.
When the donor dies, the usufruct automatically ends and the children acquire full ownership without additional inheritance tax on the reunification of ownership.
This arrangement requires a solid legal framework, including support from a notary and potentially an inalienability clause, to avoid family disputes over the management of the property.
Passing a property on to your children while continuing to benefit from it during your lifetime: this is precisely what a gift with split ownership makes possible. Many parents who own a main residence or rental property ask themselves the same question as they approach retirement, or simply when planning their estate: how can you help your children without immediately giving up your assets and without facing a significant tax bill upon death? The answer often lies in a long-established but still highly relevant legal mechanism: split ownership applied as part of a gift.
The principle is simple: ownership of the property is divided into two separate rights, bare ownership, which is given to the children, and usufruct, which is retained by the parents. The parents continue to live in the property or receive rental income, while the children become owners of part of the property's value without having to wait until their parents' death.
This arrangement is particularly attractive because it combines estate planning and tax optimisation within a well-established legal framework.
In this article, we explain how a gift with split ownership works, its specific tax advantages, what happens when the donor dies, possible alternatives such as a gift of full ownership or a cross-split ownership purchase through an SCI, as well as the essential precautions to take to ensure the transfer proceeds smoothly within the family.
What Is a Gift with Retained Usufruct?
Bare Ownership and Usufruct: Two Separate Rights
Ownership of a property can be divided into two complementary legal rights. Usufruct gives the holder the right to use the property, for example by living in it, or to receive its income, such as rent if the property is let. Bare ownership corresponds to the right to ultimately dispose of the property, but without being able to use it or receive income from it while the usufruct remains in place. Together, these two rights constitute full ownership.
With a gift involving split ownership, parents give the bare ownership to their children while retaining the usufruct. In practical terms, nothing changes in their daily lives: they continue to occupy their home or receive rent from a rental property, exactly as they did before the gift. The children, meanwhile, become owners of part of the property's value without this having any effect on its day-to-day use while their parents are alive.
Why Parents Choose This Arrangement
This choice addresses a very practical concern: passing on assets without giving them up entirely. Many parents worry that gifting full ownership would deprive them of their home or rental income that they may need during retirement.
A gift with split ownership removes this concern because they retain the use of the property or its income until their death. It is also a way of helping children with a future project, for example by allowing them to eventually benefit from a property they may sell or occupy once the usufruct has ended, while the parents retain control over their assets during their lifetime.
This mechanism forms part of a broader approach to wealth management, which also applies when selling a property in bare ownership that has already been split: in both cases, the property's value is divided between two holders of different rights, with specific tax and practical rules that should be understood before making a commitment.
The Tax Advantages of a Gift with Split Ownership
Tax Allowances Renewed Every 15 Years
One of the main advantages of a gift with split ownership lies in the tax allowances applicable to gifts between parents and children. Each parent can give each child an amount exempt from gift tax, up to a threshold set by the French tax authorities.
What makes this system particularly attractive over the long term is that this allowance is renewed every 15 years. In theory, a couple can therefore spread several gifts involving split ownership over several decades, gradually transferring a larger estate without exceeding the tax-free thresholds for each transaction.
This strategy of making gifts with split ownership over time makes it possible to plan the transfer of family assets well in advance, long before inheritance becomes an urgent issue.
A Reduced Taxable Base Thanks to the Tax Valuation of Usufruct
A second major advantage is that when only bare ownership is gifted, rather than full ownership, the taxable base used to calculate gift tax is automatically reduced.
The French tax authorities apply a scale that divides the property's total value between usufruct and bare ownership according to the donor's age on the date of the gift. The younger the donor, the higher the value attributed to the usufruct they retain, and therefore the lower the value of the bare ownership transferred and taxed.
Conversely, the older the donor, the higher the taxable value of the bare ownership, because the usufruct retained is statistically expected to last for a shorter period.
In practical terms, making a gift with split ownership relatively early, for example between the ages of 55 and 65, makes it possible to transfer a significant proportion of the property's value while paying tax on only a fraction of that value. This is the main tax advantage compared with a conventional gift of full ownership, where the property's entire value would immediately be subject to gift tax.
What Happens When the Donor Dies?
This is undoubtedly one of the most important aspects to understand. When the parent holding the usufruct dies, the usufruct automatically ends by operation of law.
The children, who until then held bare ownership, become full owners of the property without any additional legal transaction being required and, as a general rule, without additional inheritance tax on the reunification of full ownership.
The property was already transferred for tax purposes when the initial gift was made: the ending of the usufruct is simply an automatic consequence of the donor's death, rather than a new taxable transfer.
This is precisely what distinguishes a gift with split ownership from simply waiting for the estate to be settled after death. The value of the usufruct, which would otherwise have formed part of the estate and potentially been taxed at death, is not subject to additional inheritance tax as a result of this anticipated arrangement.
For a property that increases in value over time, the savings can be significant, since the children benefit from the potential increase in the property's value without additional taxation when full ownership is restored.
This mechanism must nevertheless be distinguished from a conventional inheritance without a prior gift, where heirs and potentially the surviving spouse are subject to different rules. For families who have not anticipated the transfer through a gift with split ownership, questions relating to inheritance and the rights of the surviving spouse arise in a more complex context, particularly when the property needs to be sold after a death.
Gift with Split Ownership, Gift of Full Ownership or Cross-Split Ownership Purchase Through an SCI: What Are the Differences?
Gift of Full Ownership
A gift of full ownership is the simplest arrangement: the parents immediately transfer all their rights in the property without retaining anything.
It has the advantage of being straightforward and avoids any shared management between the usufructuary and bare owner. However, it deprives the parents of any future use of or income from the gifted property, which can be problematic if they still need their home or rental income to live on.
From a tax perspective, it is also less advantageous because the property's entire value is subject to gift tax, without any reduction linked to the donor's age.
A gift with split ownership therefore represents a compromise: it allows parents to transfer assets immediately while retaining use of the property, with more favourable taxation than a gift of full ownership.
Cross-Split Ownership Purchase Through an SCI
Another wealth-management strategy, which is different but sometimes confused with a gift with split ownership, consists of purchasing a property through an SCI using a cross-split ownership arrangement.
Under this arrangement, several people, often members of the same family, purchase a property together through an SCI, but their rights are divided: each person may hold the usufruct of shares whose bare ownership is held by another person, according to the allocation set out in the company's articles of association.
The main objective here is mutual protection in the event of one partner's death, rather than the gradual transfer of assets from parents to children.
Unlike a gift with split ownership, a cross-split ownership purchase takes place when the property is acquired rather than as part of the transfer of a property that is already owned.
Both mechanisms rely on the same legal concept of split ownership but pursue different objectives: planning a family inheritance in one case and organising mutual protection between co-owners in the other.
These tools can also be combined as part of an overall wealth-management strategy, with the support of a notary to determine the arrangement best suited to the family's circumstances.
Whatever option is chosen, it may be useful to assess the property's current value beforehand by obtaining a free online property valuation, providing a concrete basis for discussions with the notary and future beneficiaries.
Example: Gifting the Bare Ownership of a Family Home
Consider a couple who own a house valued at €400,000 and wish to give the bare ownership to their two children while retaining the usufruct.
According to the applicable tax scale, if the donor is, for example, between 61 and 70 years old at the time of the gift, the value of the retained usufruct may represent approximately 40% of the property's total value, while the bare ownership transferred represents approximately 60%.
In this example, the value of the bare ownership transferred would therefore be approximately €240,000 for the entire property, or €120,000 per child if the gift is divided equally. If both parents jointly make the gift, each child actually receives a share from each parent.
Thanks to the allowances applicable between each parent and each child, a significant proportion of this value may be exempt from gift tax, with any remaining amount taxed according to the applicable progressive scale.
Fifteen years later, if the parents wish to transfer another property or make an additional gift, they can once again benefit from the same allowances, which will have been renewed.
When both parents die, the children will become full owners of the house without additional inheritance tax on the value of the usufruct that ends at that time, even though the property may have continued to increase in value between the initial gift and their parents' deaths.
This illustrates the practical benefit of making a gift with split ownership sufficiently early: the earlier the gift is made, the greater the proportion of the property's value that can potentially be transferred under favourable tax conditions.
Precautions to Take Before Proceeding
The Risk of Conflict with Children Holding Bare Ownership
A gift with split ownership creates a legal situation in which two categories of people have different but complementary rights over the same property.
This coexistence of rights can lead to tensions, particularly if the property requires major work, if the parents wish to sell it or change the way it is rented, or if the children holding bare ownership have different expectations regarding the management of the property.
As a general rule, major repairs are the responsibility of the bare owner, while routine maintenance is the responsibility of the usufructuary, but the precise allocation should be clearly anticipated to avoid disagreements.
Questions may also arise if the parents wish to sell the property during their lifetime. Such a sale generally requires the agreement of the bare owners, which can complicate matters if the children and parents do not agree.
The Inalienability Clause
To secure the arrangement, an inalienability clause can be included in the deed of gift. This temporarily prevents children holding bare ownership from selling or transferring their rights without the consent of the parents holding the usufruct.
This clause protects parents against the risk that a child, for example because of financial difficulties, might seek to monetise their bare ownership in a way that could complicate the situation of the usufructuary who remains in the property.
However, the clause must be carefully drafted and limited in duration or to circumstances permitted by law in order to remain legally valid.
Notarial Support: An Essential Step
Given the technical nature of the subject, including calculation of the tax scale, drafting of clauses and coordination with the rest of the family estate, a gift with split ownership cannot be improvised.
A notarial deed is mandatory for this type of gift, and the notary's role goes far beyond a simple formality: they advise on the most appropriate allocation between the children, anticipate potential conflicts and legally secure the arrangement over the long term.
It is also advisable to consult a local real estate advisor to assess the actual value of the property and anticipate the practical consequences of the gift, particularly if a sale is being considered in the medium term, whether by the parents holding the usufruct or later by the children once they become full owners.
If the family situation is international, for example if the parents or children live in different countries, the issue becomes even more complex, with tax and civil law rules that may vary from one country to another. In this case, it is essential to understand the specific rules governing an international inheritance before finalising the arrangement, in order to avoid unexpected tax or legal consequences.
Contact a Capifrance Real Estate Advisor
Planning the transfer of assets through a gift with split ownership requires a clear understanding of the property's actual value, its potential future development and the practical implications of dividing ownership between usufruct and bare ownership.
A local Capifrance real estate advisor can assist you before the gift by accurately valuing the property, discussing possible scenarios with you and your notary, and advising you on the best way to enhance the long-term value of the property, whether it is to be occupied, rented out or eventually sold.
Working with a professional who understands your local market is a valuable asset in helping your family estate planning project proceed smoothly.
Conclusion
A gift with split ownership allows you to transfer the bare ownership of a property to your children while retaining the usufruct, i.e. the use of the property or the income it generates.
It benefits from favourable taxation through allowances renewed every 15 years and a taxable base reduced according to the donor's age.
When the donor dies, the usufruct ends without additional inheritance tax on the reunification of ownership, making this an effective estate-planning tool.
It differs from a gift of full ownership, which is simpler but less flexible and generally less tax-efficient, and from a cross-split ownership purchase through an SCI, which is designed primarily to protect co-owners rather than transfer assets from parents to children.
This arrangement requires precautions: anticipating potential disagreements with children holding bare ownership, considering an inalienability clause and systematically seeking advice from a notary.
Before proceeding, seek support from legal and real estate professionals to secure your estate-planning project under the best possible conditions.
If you are considering this type of arrangement, do not hesitate to consult a notary and a real estate advisor to carefully plan the transfer of your family assets.
FAQ
What Is a Gift with Retained Usufruct?
It is a gift in which the donor transfers only the bare ownership of a property to their children while retaining the usufruct, i.e. the right to occupy the property or receive income from it until their death. This is the central mechanism of a gift with split ownership.
What Are the Main Tax Advantages of a Gift with Split Ownership?
It allows you to benefit from the tax allowances applicable between parents and children, renewable every 15 years, and to reduce the taxable base of the gift because only the value of the bare ownership, calculated according to a scale based on the donor's age, is taken into account for gift tax.
What Happens to the Usufruct When the Donor Parent Dies?
The usufruct automatically ends when the usufructuary dies. The children holding bare ownership then become full owners of the property, generally without additional inheritance tax on the value corresponding to the ending of the usufruct.
Can a Property Subject to a Gift with Split Ownership Be Sold?
Yes, but the sale generally requires the joint agreement of the usufructuary and the bare owners, unless a specific clause in the deed of gift provides otherwise. This is why it is important to anticipate such situations with a notary when drafting the deed.
What Is the Difference Between a Gift with Split Ownership and a Gift of Full Ownership?
With a gift of full ownership, the parents immediately transfer all their rights in the property and retain no right to use it. With a gift involving split ownership, they continue to occupy the property or receive income from it thanks to the retained usufruct, with generally more favourable taxation.
Is a Cross-Split Ownership Purchase Through an SCI Comparable to a Gift with Split Ownership?
Both are based on the same legal concept of split ownership, but they have different objectives. A cross-split ownership purchase is primarily designed to protect co-owners in the event of death, whereas a gift with split ownership organises the gradual transfer of assets from parents to their children.
Is It Mandatory to Use a Notary for a Gift with Split Ownership?
Yes, the deed of gift must be drawn up by a notary. Their support is also valuable in choosing the most appropriate allocation between the children, securing specific clauses such as an inalienability clause, and anticipating the long-term practical consequences of the arrangement.
How Do I Know Whether a Gift with Split Ownership Is Suitable for My Situation?
It depends on many factors: your age, the type of property, your income or housing needs, and your children's circumstances. Obtaining an accurate valuation of the property and discussing the situation with a notary and a local real estate advisor, for example to assess your property sale project in the medium or long term, can help you develop a solution suited to your personal circumstances.
You can also browse Capifrance property listings to get an idea of the prices being asked for comparable properties in your area.
Author :
Frédéric Rémy – Director of Commercial Performance
A real estate professional for several years within the Capifrance network, I would like to share with you some essential advice to help you succeed in your real estate project with the support of our advisors.
