Démembrement de Propriété: The Principles

French property law allows full ownership (pleine propriété) to be split into two distinct real rights: usufruct (usufruit) and bare ownership (nue-propriété). Alternatively, full ownership may be split between bare ownership and a right of use and habitation (droit d'usage et d'habitation, DUH). These rights are independent and may be held by different persons simultaneously. When the usufruct or DUH ends — typically by the death of the usufructuary or the expiry of a fixed term — the bare owner automatically recovers full ownership without any transfer tax or supplementary payment.

Usufruit (Usufruct)
Right to use, enjoy, and collect fruits (income) from the asset
Usufructuary may let the property to third parties and collect rent
May sell or transfer the usufruct (but not create a perpetual usufruct)
Responsible for maintenance and current repairs (réparations d'entretien)
Used in leisure/tourism investment: promoter retains usufruct, sells nue-propriété to investor
Droit d'Usage et d'Habitation (DUH)
Personal right: holder may use the property and enjoy it personally
Cannot be transferred or let to third parties (unlike usufruct)
Terminates at expiry of fixed term (C. civ. Art. 617)
Used in retirement residence structures: resident holds DUH; investor holds nue-propriété
Three-tier structures possible: promoter sells nue-propriété to investor; retains usufruct; grants DUH to end-user

Nue-Propriété Investment: How It Works

The most common private investor application of démembrement in tourism and leisure real estate is the prépropriété model: the developer splits the property, sells the bare ownership to an investor at a significantly discounted price, and retains the usufruct for a fixed period (typically ten to twelve years). During the usufruct period, the developer or a management company lets the furnished property to tourists or seasonal guests, collects all rents, and maintains the property. The investor holds no income during this period and carries no management responsibilities. At the end of the usufruct period, the investor automatically recovers full ownership — free of any additional payment and without transfer taxes. In some structures, the investor may also have limited personal use rights (a number of weeks per year in the property or a comparable one in the same group).

Repairs: who pays what

The allocation of repair costs is governed by the Civil Code. Maintenance and running repairs (réparations d'entretien) are the usufructuary's responsibility. Major structural repairs (grosses réparations, C. civ. Art. 606) — principally load-bearing walls, major beams, roof structure, and complete replacement of principal systems — are the bare owner investor's responsibility. In practice, for new-build properties with ten-year construction warranties (garantie décennale), the most significant potential grosses réparations will be covered by the builder's insurance throughout almost the entire démembrement period. This considerably limits the investor's out-of-pocket exposure during the usufruct term.

Position in copropriété

Where a démembrement scheme involves a building subject to the copropriété statute, the law requires the appointment of a single mandataire commun to exercise voting rights at general assemblies on behalf of both the bare owner and the usufructuary. In practice, the promoter-usufructuary is typically designated as this common representative, which means the investor-bare owner has no direct vote while the usufruct persists. The rule reducing the voting rights of a majority copropriétaire does not currently apply where a person becomes majority only by combining their full-ownership lots with their usufruct lots.

Tourism Residences: The Commercial Lease Structure

The most common investment format in classified tourism residences is full acquisition with a simultaneous long-term commercial lease to a management company. The investor buys the furnished apartment outright, then immediately lets it to a hotel or para-hotel management company under a commercial lease of at least nine years. During this period the management company bears all operating costs, maintenance, and furnishing costs, sublets to tourists, and collects the rents. The investor receives a guaranteed annual rental income from the management company and has no management involvement. At lease end, the investor recovers free use of the property unless the lease is renewed.

The management company's commercial lease rights

Where the management company provides services in the let premises (which is invariably the case in a classified tourism residence), the lease qualifies as a commercial lease under C. com. Art. L 145-7-1. The management company therefore holds statutory renewal rights and, if renewal is refused, an eviction indemnity calculated by commercial lease rules. The marketing documentation of the residence must prominently disclose this right and the general method for calculating the indemnity — a requirement under C. tourisme Art. L 321-3. For landlords: refusal to renew entails a potentially significant eviction cost and must be planned for.

Classified tourism residences: definition and conditions

A résidence de tourisme is a commercially operated, classified accommodation establishment — classified in star categories by Atout France for five-year terms under C. tourisme Art. D 321-1 to D 321-7. It must consist of furnished units offered to tourists for day, week, or month stays, with a minimum of common facilities, managed by a single physical or legal person. Where held under copropriété, at least 70% of the furnished units must be subject to a minimum nine-year letting obligation (55% for residences operating for more than nine years), and management must be by a single manager linked to all owners by lease or mandate.

Résidences-services

Service residences (résidences-services) encompass a wider category: student residences, senior citizen residences (including retirement homes and assisted living facilities), and holiday residences with ancillary services. Student residences must be at least 70% occupied by students or apprentices and offer at least three of the four qualifying para-hotel services (breakfast, regular cleaning, linen, non-personalised reception).

The Censi-Bouvard Tax Reduction

The Censi-Bouvard scheme (CGI Art. 199 sexvicies) provided an income tax reduction for LMNP investors acquiring furnished units in qualifying service residences up to 31 December 2022. Investments made before that date and meeting the conditions remain eligible for the annual spread of the reduction over nine years. The scheme is no longer available for new investments made after 31 December 2022.

Censi-Bouvard at a Glance (investments made to 31 December 2022)
Tax reduction rate11% (from 2012); 25% in 2009–2010; 18% in 2011
Maximum investment base€300,000/year (all qualifying acquisitions combined)
Maximum annual reduction€33,000 (11% × €300,000)
SpreadOver 9 years (1/9th per year)
Carry-forwardUnused fractions carry forward 6 years (oldest fractions offset first)
Letting commitmentContinuous furnished letting to operator for at least 9 years from acquisition/completion
BeneficiaryLMNP status required at acquisition; BIC income throughout commitment period
Eligible residencesEHPAD; senior service; adult disability; student service (70% students, 3+ services); long-stay medical
Amortissement restrictionBuilding amortissement deductible only on price fraction exceeding the Censi-Bouvard base
RecaptureOn breach of letting commitment, disposal, or démembrement before end of 9-year period (not on death/invalidity/redundancy)
DeclarationFirst year: include letting commitment; attach lease copy and acquisition deed. Change of operator: attach new lease
Censi-Bouvard: No Cumulation with Certain Other Schemes

For a given unit, the investor cannot combine Censi-Bouvard with overseas investment tax reductions. The annual tax reduction fraction counts within the global cap on personal tax incentives. Amortissement of the building is only available on the cost base in excess of the Censi-Bouvard base — so effective depreciation claims are reduced. The calculation of the net benefit of the scheme must factor in the reduction in future amortissement deductions.

VAT Recovery on Tourism Residences

One of the most commercially significant features of a qualifying classified tourism residence investment is the potential to recover the VAT paid on the acquisition price. Rents charged by the management company to tourists are subject to VAT at 10% on accommodation where the residence qualifies as para-hôtellerie, meaning it offers at least three of the four hotel services (breakfast, cleaning, linen, reception) in professional conditions. When rents from the management company to the investor-owner are also subject to VAT (CGI Art. 261 D, 4°-a or 261 D, 4°-c), the investor can recover all input VAT on the purchase price, construction, and fitting-out costs. In practice, in packages marketed by developers, the investor typically pays the purchase price net of VAT, with the developer recovering and pre-financing the VAT on the investor's behalf. If the property is sold within 20 years of acquisition, a proportionate fraction of the recovered VAT must be refunded — at 1/20th per year of unexpired term.

Income Tax on Tourism Residence Rents

Revenus fonciers applies where the investor lets the premises bare (unfurnished) to the management company, even if the management company then sublets furnished to tourists. The usual revenus fonciers rules apply: actual charges deductible under the régime réel; déficit foncier imputable on global income up to €10,700/year (balance carried forward ten years).

BIC applies where the investor lets the property furnished — whether as an LMP or LMNP. This is the standard structure for tourism residences. Under the régime réel, amortissement of building and furniture is deductible (subject to the Censi-Bouvard restriction where applicable). For LMNP investors, deficits are ringfenced against future furnished letting income (ten-year carry-forward); for LMP investors, deficits are imputable on global income without limit. Note that the Censi-Bouvard scheme is reserved to LMNP — LMP investors cannot benefit from it.

Where the investor receives advance rents in a lump sum at lease start (corresponding to all rents for the entire lease term), the full amount is taxable in the year received — there is no spreading. This may create a significant one-year tax spike but simultaneously allows any accumulated déficits fonciers to be consumed in that year, which can be advantageous in some cases.

The Investor's Annual Reporting Obligation

The management company must communicate an annual report to all owners containing: the occupancy rate achieved during the year; significant events; and a detailed breakdown of income and expenditure (split between variable charges such as commissions, cleaning, laundry, energy, and fixed charges such as staff, maintenance, lease, and taxes). Owners may request the full exploitation accounts for their residence. This transparency obligation is legally enforceable and constitutes an important due diligence tool before acquisition.

Multipropriété / Timeshare: Attribution en Jouissance à Temps Partagé

The multipropriété (attribution en jouissance à temps partagé) structure is governed by Loi 86-18 du 6 janvier 1986 and provides for the creation of a company (société d'attribution) that grants each member the right to use an apartment for a defined annual period. The legal framework involves the attribution company holding the property, with members holding company shares rather than direct property rights. These companies generally benefit from a special regime under CGI Art. 239 octies where the benefit-in-kind (the value of the accommodation made available to members without charge) is excluded from the company's taxable income and is not treated as a dividend for the individual member-shareholders — effectively placing the member in the same position as if they were direct owner-occupiers. This special regime applied to accounting periods opened until 31 December 2023.

Key Points: Démembrement and Tourism Residences
Démembrement: splits full ownership into nue-propriété + usufruit or DUH. Usufruct: right to use, enjoy, and let to third parties; transferable; usufructuary responsible for maintenance repairs. DUH: personal use right only; non-transferable; cannot be let. Bare owner: responsible for grosses réparations (C. civ. Art. 606 = load-bearing structures, major systems); in new-builds, largely covered by 10-year construction warranty during démembrement period. Automatic consolidation at end of fixed usufruct term: no transfer tax, no supplementary payment.
Nue-propriété acquisition (prépropriété model): developer retains usufruct (10–12 years); sells bare ownership at discount reflecting ceded income streams; investor has no income or management obligation during usufruct period; may have limited personal use weeks. Copropriété: mandataire commun (typically usufructuary promoter) appointed to vote at AGMs — bare owner investor has no direct vote during démembrement period.
Tourism residence with commercial lease: investor acquires full ownership; simultaneously lets under commercial lease (≥9 years) to management company (C. com. Art. L 145-7-1); management company bears operating costs, lets to tourists, pays guaranteed rent to investor. At expiry: investor recovers free use unless lease renewed. Management company holds commercial lease renewal rights and eviction indemnity entitlement — must be disclosed prominently in marketing documents (C. tourisme Art. L 321-3).
Censi-Bouvard (CGI Art. 199 sexvicies — new investments from 2023 no longer eligible): 11% reduction on investment base up to €300,000/year; spread over 9 years (1/9th per year); carry-forward 6 years. Eligibility: LMNP status; BIC income; 9-year continuous furnished letting to operator; eligible residences (EHPAD, senior service, adult disability, student service, long-stay medical). Amortissement restriction: deductible only on cost base exceeding Censi-Bouvard base. Recapture: on breach, disposal, or démembrement.
VAT on tourism residences: rents from management company to tourists subject to VAT at 10% (para-hôtellerie: ≥3 of 4 hotel services). Investor-owner may recover acquisition VAT where rents to investor are also VAT-subject (CGI Art. 261 D, 4°-a or 4°-c). In developer packages: investor typically pays HT price; developer pre-finances VAT. Sale within 20 years: repay 1/20th per unexpired year.
Income tax on tourism residence rents: revenus fonciers if let bare to operator; BIC if let furnished (standard structure). Régime réel BIC: amortissement deductible (net of Censi-Bouvard base); LMNP deficit ringfenced 10 years; LMP deficit on global income unlimited. Lump-sum advance rent: fully taxable in year received; no spreading. Annual operator reporting obligation: occupancy rate, events, detailed income/expenditure — legally enforceable.
Multipropriété (Loi 86-18): société d'attribution; members hold shares not direct property rights; benefit-in-kind regime (CGI Art. 239 octies) excluded benefit from IS base and from dividend treatment for individual members (for periods to 31 December 2023); TVA exemption on essential management services (CGI Art. 261 A). Share transfers: capital gains on securities regime; transfer duties on real estate basis.
Questions About Démembrement or Tourism Residence Investment?

Whether you are evaluating a nue-propriété acquisition, structuring an investment in a classified tourism residence, or assessing your Censi-Bouvard position, our guides cover the complete French framework for specialist property investment.

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This article covers démembrement de propriété and tourism/service residence investment as applicable to private investors. The Censi-Bouvard scheme (CGI Art. 199 sexvicies) is closed to new investments made after 31 December 2022; investors who made qualifying investments before that date continue to spread and carry forward their annual tax reduction tranche under the rules in force at acquisition. The special benefit-in-kind regime for multipropriété companies (CGI Art. 239 octies) applied to accounting periods opened until 31 December 2023. VAT recovery mechanics should be confirmed with a VAT specialist before any acquisition.