The freehold of a property includes rights of using this property or to rent it out in order to generate income and also the right to sell it, donate it, hand down, or demolish it… When the freehold of the property is shared (the exact term being “divided”) between usufruct and freehold property, the usufruct consists in the right to use this property and to receive the income without being the owner whereas the bare-ownership consists in having ownership of the said property without necessarily having the right to use it or receive an income from it.
1. Sale of an immovable property: if the property was to be divided, the beneficial owner and the bare-owner both have to give their consent to the sale. Each of them therefore have to sign a selling mandate and the sale agreement. Each of them has the right to dispose of the property without the other person’s approval.
2. Renting out the property: the beneficial owner has the right to rent out the property and perceive the resulting income.
3. Occupancy of a property: the beneficial owner has the right of use and of dwelling. The bare-owner has the right to dispose of the property, but only with the agreement of the beneficial owner.
Is it worth investing in immovable asset by divided the property?
The division is indeed a good judicial plan to buy a more cheaply a property but also to hand it down at a cheaper cost during a succession
By dividing the bare-ownership of the beneficial ownership, the buyer will have a cheaper accommodation.
If he only purchases part of the accommodation, (the bare-ownership for example) he will only have to pay between 50% to 70% of the actual value of the property. Usually, the bare-ownership comes with a temporary beneficial ownership of 15 to 20 years depending on the immovable programs. Once this period of time has passed, the buyer becomes the full owner of the property. An interesting strategy for investors that count on the value increase over time of the immovable properties.
To also remember: it is possible to give shares of an SCI (real estate company) in division, allowing the beneficial owner to perceive an income
You are planning the establishment of your inheritance?
When the full ownership is divided between beneficial ownership and bare-ownership, the value of the property has to be allocated. This allocation between beneficial ownership and bare-ownership follow a tax rate that has been established according to the age of the beneficial owner.
The government has put in place a website to simulate the division between beneficial ownership and bare-ownership. To use this online simulator of division between beneficial ownership and bare-ownership you need to enter the amount of the value of the property to allocate and the age of the beneficial owner.
You will then get a result indicating the beneficial ownership in % of the value of the goods; the financial value of the beneficial ownership; the bare-ownership in % of the value of the goods; the financial value of the bare-ownership.