SCPI in Usufruct and Bare Ownership: An Effective Tax Strategy

Introduction to SCPI in Usufruct and Bare Ownership

The Real Estate Investment Company (SCPI) in usufruct and bare ownership represents an increasingly popular real estate investment strategy in France, notably for its tax advantages. The principle is based on purchasing the bare ownership of SCPI shares, meaning holding the asset without receiving income for a defined period, generally 10 to 15 years. This method allows benefiting from a reduced acquisition price — typically between 60% and 65% of the full ownership value — while being exempt from income tax and the Real Estate Wealth Tax (IFI) during the dismemberment period (source: AMF, 2023 Annual Report).

How SCPI Dismemberment Works

Property dismemberment splits full ownership into two distinct rights: usufruct and bare ownership. The usufructuary receives the income generated by the shares (dividends from rents), while the bare owner holds the capital without rights to income during the dismemberment period.

In the context of SCPIs, usufruct is commonly temporary (usually 10 to 15 years), after which usufruct expires and full ownership automatically reverts to the bare owner without additional costs. This operation is often carried out through special offers proposed by SCPI management companies or on the secondary market.

Tax Advantages for the Bare Owner

The main benefit for the investor holding bare ownership of SCPI shares is tax exemption during the dismemberment period:

• No IFI: the value used to calculate the IFI is that of the bare ownership, often discounted by 35% to 40% compared to full ownership (Official Notarial Scale, 2024).
• No income tax (IR): since the bare owner does not receive income, there is no need to declare it, meaning no taxation on SCPI dividends.
• No social contributions on nonexistent income.

At the end of the dismemberment period, the bare owner recovers full ownership and begins to receive income. This strategy is particularly suited to highly taxed taxpayers and/or those subject to IFI (Banque de France, 2023 tax statistics).

Purchase Price and Valuation: 60-65% of Full Ownership

The bare ownership price is discounted relative to the full ownership value, averaging between 60% and 65% depending on the dismemberment duration and SCPI yield:

Dismemberment Duration	Bare Ownership Price (% of Full Ownership Value)
10 years	65%
15 years	60%

This discount incorporates the time value of foregone income, calculated according to a tax scale based on mortality tables and interest rates (source: INSEE, 2024 dismemberment scale).

Calculation of the Real Internal Rate of Return (IRR)

The calculation of the real IRR for an investment in bare ownership SCPI takes into account:

• The discounted purchase price
• The absence of cash flows during the dismemberment period
• The recovery of full ownership at the end of dismemberment, with receipt of net income (dividends) after taxes
• The potential appreciation of the shares over time

Numerical example (SCPI average gross yield 5% annually, duration 15 years):

Parameter	Value
Bare ownership price	60% of €100,000 = €60,000
Dismemberment duration	15 years
Gross SCPI yield	5% per year
Net yield after tax (assumed investor holding full ownership)	3.5% (after income tax and social contributions)
Full ownership value at term	€100,000 (stable assumption)

Approximate IRR calculation:

• No income for 15 years
• Recovery of full ownership value at €100,000 after 15 years
• Initial investment: €60,000

The IRR corresponds to the rate r satisfying: 60,000 * (1 + r)^15 = 100,000

Calculation: (100,000 / 60,000)^(1/15) - 1 = (1.6667)^(0.0667) - 1 ≈ 3.43% per year

If we add the receipt of net income starting from year 16, this IRR improves significantly. This calculation does not account for potential appreciation of the shares, which could increase total returns.

Recommended Duration: 10 to 15 Years

The dismemberment duration is a key parameter:

• Less than 10 years: the discount is smaller, and the tax benefit decreases.
• Beyond 15 years: the discount increases, but capital is locked in longer, which may limit liquidity and flexibility.

Most SCPI dismemberment offers are calibrated around 10 to 15 years, as this period offers an optimal balance between tax advantage and investment duration (Banque de France, 2023 Study on Collective Real Estate).

Risks and Limitations of the Strategy

It is important to note certain risks:

• Illiquidity: resale of bare ownership shares can be complex and limited, especially on the secondary market.
• Risk of real estate value decline: share values may decrease, impacting the capital recovered after dismemberment.
• Commitment duration: the investor must have an investment horizon compatible with the dismemberment period.
• No income during the period: the bare owner receives no cash flow, which may not suit liquidity needs.

Comparison with Full Ownership Investment

Criteria	Bare Ownership Investment	Full Ownership Investment
Purchase Price	60-65% of value	100% of value
Income Receipt	Absent during dismemberment	Immediate
Taxation on Income	Exempt during dismemberment	Taxed according to income tax bracket + social contributions
IFI	Discounted bare ownership value	Full ownership value
Liquidity	Less liquid	More liquid
Investment Duration	Long term (10-15 years)	Flexible

Conclusion: An Attractive Tax Leverage for Long-Term Investors

Investing in SCPI through property dismemberment offers a powerful tax leverage for French taxpayers, especially those subject to IFI and high income taxation. Purchasing bare ownership at 60-65% of value significantly reduces capital outlay while deferring taxation on income and IFI. Over a 10 to 15-year horizon, the real IRR, even without immediate income receipt, is around 3.4% annually, with potential improvement linked to share appreciation and dividend receipt in full ownership.

However, this strategy requires a long investment horizon and tolerance for no income during the dismemberment period. Reduced liquidity should also be considered within the overall portfolio allocation.

Recommendation: For French investors with long-term investment capacity seeking to optimize their taxation, SCPI in usufruct and bare ownership represents a relevant solution to integrate into a comprehensive wealth strategy.

Sources

• AMF, Annual Report on SCPIs, 2023
• INSEE, Dismemberment Scale and Mortality Tables, 2024
• Banque de France, Study on Collective Real Estate and Taxation, 2023
• Bloomberg, Analysis of Real Estate Yield Rates, 2024
• Official Notarial Scale, Ministry of Justice, 2024