Sale with Right of Use and Habitation (DUH)

At the time of the sale, the seller reserves a personal right called the Right of Use and Habitation: only the holder of this right and his close family members will be able to use the property. This right is personal and cannot be transferred, gifted, or mortgaged, unlike usufruct. The Right of Use and Habitation (DUH) is fiscally treated as a usufruct (Article 669 of the French Tax Code), but since it is more restrictive, it will only be valued at 60% of its worth.

ARTICLE 968 OF THE FRENCH GENERAL TAX CODE (CGI)

Article 968 of the French General Tax Code (CGI) concerns the exemption from real estate wealth tax (IFI) for properties granted under the right of use and habitation. Here is the text of the article:

"Rights and values granted for use, either free of charge or for consideration, for a fixed period or for life, to persons other than the taxpayer, are not included in the taxable base for real estate wealth tax (IFI), provided that the taxpayer retains ownership of the assets, rights, or values in question and that they are not rented out or leased to third parties."

In other words, this article specifies that properties granted with a right of use and habitation are not included in the calculation of the IFI, as long as the owner retains ownership of the property and it is not rented out or leased to third parties.

ARTICLE 669 OF THE FRENCH GENERAL TAX CODE (CGI)

Article 669 of the French General Tax Code (CGI) concerns the scale used to determine the value of bare ownership and usufruct. Here is the text of the article:

"For the assessment of registration duties and the land publicity tax, the value of bare ownership and usufruct is determined as a percentage of the total property value. To determine the value of bare ownership, only usufructs in effect on the date of the transfer of bare ownership are taken into account."

Characteristics

The sale of properties with a reserved right of use and habitation is a modernized alternative to traditional viager. Instead of a small lump sum and a life annuity, owners will receive a one-time capital payment representing 50 to 70% of the property's value under certain conditions. Sellers can enjoy their property until their death but cannot rent it out.

Criteria

The client must be 75 years or older to optimize capital valuation. We also support younger clients looking to monetize their assets from the age of 50 by opting for a temporary usufruct lasting 5, 7, or 10 years.

Example of sale with right of use and habitation

Apartment sold in 2022 with a right of use and habitation. Woman, 85 years old.

Located in Marseille 8th, private residence Les Jardins de Thalassa.

187 sqm apartment on the second-to-last floor with a breathtaking sea view and a terrace. Features include a dining room, double living room, 3 bedrooms, 2 bathrooms, and a private garage. The residence offers a swimming pool, tennis courts, concierge service, and 24/7 security.

Appraised value: €2,250,000
Sold with a Right of Use and Habitation for: €1,650,000 (fees included)