Naked Ownership or Usufruct: How to Properly Split Your SCPI Shares

The subdivision of SCPI shares allows investors to fine-tune their real estate investments to align with their individual wealth management goals. Two real-world examples illustrate the flexibility of this mechanism: planning for retirement without incurring taxes during one’s working years, or structuring the transfer of assets while continuing to generate income.
 

Roger acquires bare ownership of SCPI shares for 100,000 euros. Including the discount, he saves 35% compared to the price of full ownership. For 15 years, he receives no income and is therefore not subject to any taxes on rental income. At age 65, upon retirement, he automatically regains full ownership of his shares. Based on a hypothetical net annual return of 5%, he will then receive nearly 7,700 euros in annual income.
 

This investment strategy addresses a simple challenge: how can one build a supplemental retirement income without increasing one’s tax burden during one’s working years? At age 50, Roger earns a comfortable but heavily taxed income, with a marginal tax rate of 41%. Direct real estate investment seems too restrictive to him, and purchasing full ownership shares in an SCPI is subject to excessive taxation. The split ownership of SCPI shares offers him an alternative well-suited to his investment horizon.
 

The legal principle of dismemberment involves separating the right of ownership into two distinct components: bare ownership, which corresponds to ownership of the property itself, and usufruct, which grants the right to collect rent. For the bare owner, the investment is made at a discounted price, generally between 60% and 80% of the value of full ownership, depending on the duration of the division. During this period, no income is received—and therefore no taxes are owed—and the shares remain excluded from the IFI tax base.
 

Usufruct for Wealth Transfer
Bernard is 71 years old. A retiree and father of three children aged 35 to 45, he wants both to maintain a source of supplemental income and to plan for the transfer of his estate within a controlled tax framework. A life annuity arrangement addresses precisely this dual challenge.
 

Bernard can transfer the bare ownership of his SCPI shares to his children today, while retaining the usufruct—that is, the right to receive rental income for the rest of his life. Upon his death, the usufruct automatically terminates, and his children acquire full ownership of the shares without incurring any additional taxes.
 

The value of the bare ownership interest is determined based on the age of the usufructuary. At age 71, it represents approximately 70% of the value of full ownership. By structuring his investment to remain below the threshold of 100,000 euros per child—which corresponds to the tax exemption threshold for gifts—Bernard can thus arrange for a gradual transfer of assets while securing his income and optimizing estate taxes.
 

Unlike the bare owner, the usufructuary prioritizes generating immediate income. The usufructuary receives all of the rental income distributed by the SCPI without tying up capital long-term and without any risk to the principal, since the usufruct is, by its nature, temporary and automatically expires upon maturity. This is a tool particularly well-suited for generating supplemental income or making the most of cash reserves within a controlled framework.
 

The separation of ownership as applied to SCPIs is a particularly efficient investment solution, combining several performance drivers. It offers a financial benefit through the acquisition of shares at a significant discount compared to their full-ownership value. From a tax perspective, the separation of capital and income allows for the optimization of the tax burden by tailoring it to the investor’s profile and objectives. This structure addresses a major wealth management challenge by facilitating the organization, transfer, or structuring of assets over the long term.
 

Daniel While, Director of Research and Strategy at Euryale, explains that by allowing investors to separate capital from income, the division of SCPI shares offers a practical solution for a wide range of wealth management goals, without compromising the real estate nature or the risk pooling inherent in SCPIs. This mechanism allows investors to take a longer-term view of real estate investments, making it a particularly effective tool for aligning an investment with a specific wealth-building goal.