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  • Writer's pictureCarsten Sprotte

Did he just say "Property in the Nude"?

All about the antics of avoiding real estate inheritance taxes

Yes, you heard correctly. The way to avoid the dreaded French inheritance tax requires a legal act of denuding, or stripping down to nue-propriété. The act is actually referred to as démembrement. And how do you suggest I translate that? Naked, dismembered property? Things are going from bad to worse. Let’s get back to Latin, which explains so much about French (or Napoleonic) law, as distinct from British and American law. The former is based on a voluminous codex that specifies how things must be done. The latter derives from bilateral agreements between parties and legal precedents. The Romans distinguished not just one, but three kinds of property rights:

  • Usus, or the right to use

  • Fructus, or the right to benefit from the property’s yield (produce or income)

  • Abusus, or the right to transform, destroy, or transfer the title of the property (sale or gift). French law combines the first two into a bundled property right called usufruit, while labeling the third right nue-propriété.

Today, if you purchase a French property, you will by default acquire all of these property rights bundled together (la pleine propriété). However, there are some instances in which you may choose otherwise. The most common such instance is when you want your children to inherit the property without them having to pay the confiscatory inheritance tax. Unlike the USA, where inheritance is only taxed when its value exceeds a fairly significant threshold, France will tax even your breadcrumbs! To avoid such taxes, you must therefore gift the maximum amount possible of your wealth (or dearth) before you die. So here’s the trick as it pertains to real estate. When you purchase property, ask your notaire to arrange the transaction so that you have the usufruit and your children the nue-propriété. This means that you can benefit fully from the property until the end of your life. If you are married, then your surviving spouse can benefit until the end of his/her life as well.

Delving a bit deeper into the naked nitty-gritty, here are some details to keep in mind: The funds for the purchase will need to be sent from each future joint owner. So you will first need to transfer those funds to your child or children and instruct them to transfer them to the notaire’s escrow account. If you have a prodigal son who might just take the money and run off to the Bahamas, think twice. The transfer of the funds to your child or children will need to be registered as a gift (or donation) in France. The notaire takes care of this formality. Provided your children are not tax residents of France, they will not have to pay any French tax on the gift.

The breakdown of the property value into nue-propriété and usufruit is a function of your age. For example, if you are in your sixties, the usufruit would be valued at 40%. This value decreases until the age of 91, where it represents only 10%. As owner of the usufruit, you are 100% liable for all of the annual taxes related to the property as well as operating expenses and repairs (with the exception of some major repairs as specified in article 606 of the civil code). Should you decide to sell the property before then, you’ll need to have the agreement of each child who jointly owns the property. If you divorce, life gets messy. The matter of separating nue-propriété from usufruit has another, somewhat legendary, application known as viager. This consists of selling the nue-propriété of your home to someone (presumably other than your children). In this way, you maintain the usufruit and can live in your home until the end of your life. Not only do you maintain the usufruit, but you are also entitled to a rent from the person having purchased the nue-propriété at a deeply discounted price. This practice is a statistical gamble. If you purchase such a viager, it can be a way of acquiring expensive property at an unbeatable price…provided the Seller dies according to the statistical schedule!

There is the case of Jeanne Calment, who died at the record age of 122. She had sold her home as a viager when she was in her 90s to Me André-François Raffray, her notaire. He was 47 at the time, and accepted to pay her a monthly rent of 2 500 francs. The poor fellow ended up paying her twice the value of her house. Then she outlived him!

If you’d like to get a melodramatic kick out of another viager story, I would recommend the Franco-American movie “My Old Lady” starring Maggie Smith and Kristen-Scott Thomas. It takes place in the Marais, and a few other Paris places. Fun to see on film. Click on photo to access trailer.

If you’re contemplating a real French property purchase and want to know more about the options for ownership structure, contact me at

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