Dismemberment of ownership: a legal act to reduce tax costs

Dismemberment of ownership: a legal act to reduce tax costs

The dismemberment of property is a legal process that aims to divide property into bare ownership and usufruct. It is an act often used in family for a succession or a donation. It mainly makes it possible to optimize tax costs.


The concept of dismemberment of property
The dismemberment of property is a legal act that affects property rights. It results from the legal theory of the three components of the right of property which are: the usus, the fructus and the abuse.


The usufructuary may use the property for personal use or rent it for rent.

The bare owner will retain his rights to dispose of the property, but respecting the rights of the other party. There is therefore dismemberment when the three rights are not held by the same party: the right to dispose of the property, the right to use it and the right to collect the fruits thereof. The rights of bare ownership and usufruct can be given during an assignment or a donation, so a person can sell and buy rights with the dismemberment of property.

The operation of the dismemberment of property
This legal step makes it possible to distribute loads between the bare owner and the usufructuary , in particular the major repairs and the maintenance of the good. Dismemberment can be a way for new homeowners to ensure that the property they receive will be well maintained. The abuseus or the right to dispose of the property belongs to the bare owner, the usus or the right to use the good and the fructus or the right to reap the fruits are for the usufructuary. They will therefore each have their rights, such as a divorced spouse who remains at home, or a parent who has transferred part of the property in advance to his heirs in exchange for the possibility of residing there.

On the other hand, neither one nor the other can only make the sale of the good thus dismembered. If both parties decide one day to put it on sale, it takes the agreement of both to yield the entire property. This legal act ends when the usufructuary dies. At this point, the bare owner becomes the sole owner of the property without having to pay death duties . According to his wishes, he can decide to live there, put it on sale or rent.

At that time, the property is remolded . This is a very common way of preparing succession by keeping power over the property. It should be noted that it is possible to perform this act on real estate, a life insurance policy and a title account. Note that a savings account, PEA or savings plan can not be dismembered.

The benefits of dismemberment of property
In the first place, when the usufruct comes to an end, he goes free to join the bare property to have full ownership. In the second place, the dismemberment of property will allow the bare owner to share the management of some of his property with a usufructuary. The latter then gains the right to use the property and to collect income as if he were already the sole owner.

Finally, the most important is the tax benefits. Once the usufructuary has rights to the property, there is no taxation that applies . This implies that the bare owner will not pay a housing tax or property tax during the dismemberment period.

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