A property is not always held in full ownership by a single person, at a price paid in cash. Its ownership may be divided between a usufructuary and a bare owner, or it may be sold for a lump sum and a life annuity. In both cases the question of the figure comes back: what value to declare, and what value shows that the contract is balanced? Two decisions handed down at the start of 2023, one by the Commercial Chamber and the other by the Third Civil Chamber of the Cour de cassation (French supreme court for civil and commercial matters), give benchmarks.
Two French terms first. The usufruit (usufruct) is the right to use a property and to receive its income; the nue-propriété (bare ownership) is what remains, and the two rights are reunited when the usufruct ends, usually on the death of the usufructuary. A sale en viager (life annuity sale) is a sale in which the buyer pays a lump sum, the bouquet, and then an annuity until the seller’s death; the contract is valid only if it involves an aléa, an element of chance, since nobody knows how long the annuity will be paid.
The facts
Usufruct of SCI shares and wealth tax. A couple held the usufruct of all the shares in an SCI (société civile immobilière, a French property-holding company) owning a building in the Vaucluse. For the ISF (the French wealth tax then in force) for the years 2008 to 2011, the tax authority challenged the declared value. The couple claimed a 30 % discount for lack of liquidity, arguing that the SCI’s articles of association made any transfer of shares subject to the approval of all the shareholders. The NÎMES Court of Appeal, on 25 June 2020, refused: article 885 G of the French General Tax Code requires the usufructuary to declare the property at its full ownership value, “without any allowance or discount for the division of ownership” (translated from the French), and the joint-ownership method does not apply since the spouses held the usufruct of all the shares.
The sale of a house en viager. On 19 October 2011 a 78-year-old woman sold her home for a capital sum and a life annuity. She died on 17 January 2012, a little under three months later, following a fall. Her heirs sought the annulment of the sale for lack of any element of chance: the seller suffered from end-stage renal failure and was on home dialysis, and the buyer, who was close to her, could not have been unaware of it. They added that the price was illusory: for a market value of €270,000, the lump sum was only €50,000 and the annuity €15,960 a year, so that thirteen years of payments would have been needed to reach the value of the property. The ORLÉANS Court of Appeal dismissed the claim on 5 October 2021.
The decision
In the first case the Cour de cassation quashed the appeal decision (Cass. com., 15 February 2023, appeal no. 20-19.451), under articles 885 E, 885 S and 761 of the French General Tax Code. It recalled that “the value of assets included in the ISF base is the price that could be obtained for them on a real market, having regard to their factual and legal condition” (translated from the French). It then criticised the Court of Appeal for relying “on grounds relating to the absence of joint ownership and to the fact that no allowance may be claimed for the division of ownership, which are unfit to rule out that a loss of market value of the property in dispute may result from the position of the bare owners, who do not hold it directly but through company shares whose transferability is limited by a clause in the SCI’s articles requiring the approval of all the shareholders”. The case was sent back to the MONTPELLIER Court of Appeal.
In the second case it dismissed the appeal (Cass. 3e civ., 18 January 2023, appeal no. 21-24.862). It follows from article 1964 of the French Civil Code, in the version then applicable, “that the element of chance exists where, at the time the contract is formed, the parties cannot assess the benefit they will derive from it because that benefit depends on an uncertain event” (translated from the French). The Court of Appeal had found, within its sovereign power of assessment, “that nothing showed that this death was inevitable in the short term on the day of the sale”, the seller’s condition “not amounting to the end of life because of the supportive medical techniques she received at home”, and that the buyer had no medical knowledge enabling him to know that her life expectancy was compromised. Having found the element of chance, the court “was not required to answer an ineffective argument on the time needed to reach full payment of the price of the property”.
Both decisions are unreported.
What the expert takes from it
The full-ownership rule for tax does not erase the legal condition of the property. For wealth tax, the usufructuary declares the property at its full ownership value; the rule of article 885 G was carried over to the IFI (the current French wealth tax on property) in article 968 of the General Tax Code. But the full ownership value is itself “the price that could be obtained on a real market, having regard to [its] factual and legal condition”. The 2023 decision therefore distinguishes two things: a discount “for the division of ownership”, which the law excludes, and a discount for the way the property is held, here through shares whose transfer is subject to unanimous approval, which the judge must examine. A valuation report gains from naming precisely what each allowance compensates for, as the same Chamber recalled in 2025 for illiquidity discounts.
The element of chance in a viager is judged on the day of sale, from three figures. The expert does not rule on the state of health. He provides what enables the judge and the parties to reason: the market value of the property on the date of the deed, the lump sum and the annuity. In the case decided, the gap between €270,000 and a €50,000 lump sum, set against an annuity of €15,960 a year, gave thirteen to fourteen years of payments, to be compared with the life expectancy of a person aged 78. The Court held this argument ineffective once the element of chance existed. The fact remains that the balance between the annuity and the value of the property is the first indicator of a genuine sale, and that a marked imbalance feeds the discussion on a derisory price or a disguised gift.
Full ownership value first, value of the rights second. Whether ownership of the property is divided or the property is sold en viager, the starting point is the same: its market value in full ownership, vacant or occupied, on the relevant date (Charte de l’expertise en évaluation immobilière, French property valuation charter, 6th edition, November 2025, Title III, § 1.1). The value of the usufruct, the bare ownership or the annuity is then derived, by the tax scale of article 669 of the General Tax Code where it is mandatory, or by an economic method based on the income of the property, the age of the holder and a discount rate. The report states the method used and the assumptions (Title I, § 2.2), and, for tax matters, points out the discounts accepted by the authority or by the law (Title II, § 8.14).
Further reading
The Market value page describes the valuation of a property with divided ownership or sold en viager, its timescale and its fee. On the same theme: SCI shares and French wealth tax: two 10 % discounts, not three and Lifetime mortgage in France: why the valuation is decisive. The decisions are available on Légifrance: 15 February 2023 and 18 January 2023.
What next
A usufruct, a bare ownership or a life annuity to put a figure on?
I fix the market value of the property in full ownership on the relevant date, then explain the value of the divided rights or the balance between lump sum, annuity and life expectancy. The report is designed for the notaire, the lawyer or the tax authority.
Free quote, by email or by phone. No commitment before the quote is accepted. Fees are never linked to the value of the property (Charte de l’expertise, Title I, §2.1).
