In Brief (TL;DR)
Bare ownership is a real estate sales formula that offers significant advantages for both the buyer, who invests at a discounted price, and the seller, who retains the right to enjoy the property for life.
This real estate formula proves to be a strategic opportunity for both the seller, who can monetize their assets without giving up the right of habitation, and the buyer, who makes a long-term investment on favorable economic terms.
Discover how it works and what the concrete economic and tax advantages are for sellers and buyers.
The devil is in the details. 👇 Keep reading to discover the critical steps and practical tips to avoid mistakes.
Bare ownership is a real estate solution with roots in Italian legal tradition, but today it proves to be an innovative and strategic tool. It allows for the reconciliation of seemingly distant needs: that of a property owner, often elderly, to obtain immediate liquidity without leaving their home, and that of a buyer to invest in the real estate market at a favorable price. This sales formula, which separates the ownership of the property from the right to live in it, is gaining increasing interest in Italy and across Europe. Recent data show a significant growth in transactions, with a 1.7% increase between 2022 and 2023, bucking the general downturn in the real estate market.
To fully understand this mechanism is to discover a meeting point between generations, where the Mediterranean culture of attachment to a lifelong home marries with modern financial needs. For the buyer, it is a long-term investment, a way to plan for the future; for the seller, it is a resource to live their senior years with greater peace of mind. In an evolving economic context, bare ownership emerges as a smart choice, capable of offering tangible benefits to both parties involved.
What is Bare Ownership and How Does It Work
Bare ownership consists of purchasing the title to a property, but without the immediate right to use it. This right, called usufruct, remains with the seller (the usufructuary), who can continue to live in the home for their entire life or for a predetermined period. In practice, full ownership is split in two: bare ownership, which belongs to the buyer, and usufruct, which remains with the seller. The buyer, or bare owner, will become the full owner only upon the expiration of the usufruct, which usually coincides with the death of the usufructuary. This mechanism is governed by the Civil Code and represents a real right over another’s property. The transaction is formalized with a standard notarial deed, just like any other real estate sale.
The Benefits for the Seller (The Usufructuary)
For the seller, selling the bare ownership offers tangible and immediate benefits. The main advantage is receiving a substantial sum of money without having to leave their home. This is particularly useful for elderly individuals who wish to supplement their pension, cover unexpected expenses, or simply ensure a more peaceful old age while maintaining their lifestyle. Another key aspect relates to the reduction of financial responsibilities. The usufructuary is no longer required to cover the property’s extraordinary maintenance expenses, which become the responsibility of the bare owner. Furthermore, property taxes, such as the IMU, are also no longer their responsibility. This formula allows them to monetize their real estate assets, relieving themselves and sometimes even their heirs from future burdens.
The Benefits for the Buyer (The Bare Owner)
Purchasing bare ownership is first and foremost a long-term investment. The most obvious benefit is the purchase price, which is significantly lower than the market value of the full property. The discount is calculated based on the usufructuary’s age: the younger they are, the greater the price reduction. This makes the transaction accessible to those who want to invest in brick and mortar with a smaller initial capital, perhaps to secure a home for the future or for their children. From a financial standpoint, the bare owner does not have to cover ordinary maintenance costs, taxes like IMU and TARI, or regular condominium fees, which remain the responsibility of the usufructuary. Over time, the property’s value is set to increase, both due to natural market appreciation and because, as the years pass, the value of the usufruct decreases, thereby increasing the value of the bare ownership.
How to Calculate the Value of Bare Ownership
Calculating the value of bare ownership is a mathematical operation that starts from the market value of the full property, determined by a professional appraisal. The value of the usufruct is then subtracted from this amount. To determine the latter, specific coefficients periodically defined by the Ministry of Economy and Finance are used, which take into account two main factors: the usufructuary’s age and the current legal interest rate. Generally, the value of the bare ownership increases with the seller’s age, as their life expectancy decreases, and consequently, the presumed duration of the usufruct is shorter. For example, for a property of the same value, the bare ownership sold by an 80-year-old will cost more than that sold by a 60-year-old. These ministerial tables ensure a standardized and transparent calculation.
Taxes and Expenses: Who Pays for What
The division of expenses and taxes between the bare owner and the usufructuary is clearly defined by law to avoid misunderstandings. The usufructuary is responsible for expenses arising from the use and enjoyment of the property. This includes ordinary maintenance (like minor repairs), utility bills, regular condominium fees, and taxes related to possession and use, such as TARI (waste tax) and IMU. The bare owner, on the other hand, is responsible for extraordinary expenses, which are those necessary to ensure the building’s stability and structural preservation, such as re-roofing or facade renovation. Regarding purchase taxes, the bare owner pays registration, mortgage, and cadastral taxes calculated on the value of the bare ownership alone, which is lower, and may also benefit from “first home” tax breaks if they meet the requirements.
Bare Ownership in the Mediterranean Cultural Context
In Italy, and more broadly in Mediterranean culture, a home is not just a material asset but a symbol of stability, a place of affection and family continuity. The sale of bare ownership fits perfectly into this context, representing a bridge between tradition and innovation. It allows the elderly not to be uprooted from their environment and community, preserving that deep connection with their lifelong home. At the same time, it offers a concrete response to modern needs, such as supplementing increasingly inadequate pensions and managing financial autonomy in old age. This solution is also a form of estate planning that can prevent future inheritance disputes, as the property will not be part of the usufructuary’s hereditary estate. It is a choice that reflects an evolving society, where flexible tools like the reverse mortgage or, indeed, bare ownership are sought to leverage accumulated wealth.
Conclusion
Bare ownership stands out as a highly interesting solution in the Italian real estate landscape, capable of creating a beneficial balance for both parties. For the seller, it represents a valuable source of liquidity that ensures financial stability without giving up the right to live in their own home. For the buyer, it is an opportunity for a long-term real estate investment on favorable economic terms, a smart way to enter the market or plan for the future. Although the transaction requires careful evaluation and the awareness of not having immediate use of the property, the economic and tax benefits are clear. In a context where valid alternatives to the traditional mortgage are increasingly sought, this formula distinguishes itself for its ability to meet diverse needs, combining security, tradition, and strategic vision.
Frequently Asked Questions
Purchasing bare ownership means buying the title to a property, i.e., the ‘walls,’ but without the immediate right to use it (live in it or rent it out). This right, called usufruct, remains with the seller (usufructuary) for their entire life or for a predetermined period. The buyer will become the full owner, with complete enjoyment of the property, only upon the expiration of the usufruct, which usually coincides with the death of the usufructuary.
The division of expenses is clear-cut. The usufructuary, as they enjoy the property, is responsible for all ordinary maintenance costs, utilities, regular condominium fees, and taxes such as IMU and TARI. The bare owner, on the other hand, is responsible for extraordinary expenses, such as facade or roof renovation or boiler replacement—interventions that increase the property’s value over time.
The price is obtained by starting with the full market value of the property. The value of the usufruct is then subtracted from this amount. The latter is calculated by applying coefficients established by the Ministry of Economy and Finance, which vary based on the usufructuary’s age. The older the usufructuary, the lower the value of the usufruct, and consequently, the higher the price of the bare ownership, as it is presumed that the buyer will take full possession of the property in a shorter time.
The main advantage is financial: you purchase a property at a price significantly lower than the market rate. It is a long-term investment that appreciates in two ways: both through the increase in the real estate market value over time and because the value of the bare ownership grows as the usufructuary ages. Additionally, the bare owner does not pay property taxes (like IMU) as long as the usufruct is in effect.
Yes, the bare owner can sell the bare ownership to another person at any time. The transaction does not affect the rights of the usufructuary, who will continue to enjoy the property until the agreed-upon expiration. The new buyer will take over the contract under the same conditions, purchasing the bare ownership and, in turn, having to wait for the usufruct to expire to gain full use of the property.
Did you find this article helpful? Is there another topic you'd like to see me cover?
Write it in the comments below! I take inspiration directly from your suggestions.