Bare ownership: what it is and what advantages it offers to buyers and sellers

Bare ownership is an institution of Italian civil law that makes it possible to separate the ownership of a property from the right to use it. In concrete terms, the owner transfers the home to a buyer — the bare owner — but retains the right to live in it or to earn income from it for the rest of their life or for an agreed period. It is a tool used above all by elderly owners who need liquidity without leaving their home, but it can also appeal to buyers and investors with a medium-to-long time horizon.

How ownership is divided between usufruct and bare ownership

When it comes to bare ownership, two distinct rights come into play. The first is the usufruct: whoever holds it can use the property, live in it or rent it out and collect the rent. The second is bare ownership proper: whoever acquires it is the formal owner of the asset, but cannot dispose of it fully as long as the usufruct is in force. Upon the death of the usufructuary — or at the end of the agreed term — the two rights are automatically reunited, with no need for a further notarial deed, and the bare owner becomes the full owner.

The advantages for the seller

For the seller — usually an elderly person — selling the bare ownership means receiving a substantial sum of money immediately while continuing to live in their own home. The main advantages are:

• Immediate liquidity, useful for supplementing a pension, covering healthcare costs or helping one's children.
• No physical move: you stay in your own home until the usufruct ends.
• Extraordinary maintenance costs generally pass to the bare owner, while ordinary costs remain the responsibility of the usufructuary (unless otherwise agreed).
• The price obtained is lower than the full market value, but the gap narrows as the seller gets older, since the expected duration of the usufruct decreases.

The advantages for the buyer

The buyer pays a discounted price compared with the market value of the unencumbered property. The discount depends on the age of the usufructuary and on the expected duration of the usufruct: the younger the usufructuary, the larger the discount required, because the buyer will have to wait longer before having full use of the asset. Among the concrete advantages:

• Access to prestigious properties at a lower cost than a traditional purchase.
• A plannable investment: the buyer knows the characteristics of the transaction from the outset.
• The possibility of reselling the bare ownership before the usufruct is extinguished, with a potential margin if the market has grown.
• In some situations, tax breaks on the purchase of a first home also apply to bare ownership: it is advisable to check the conditions with a notary or an accountant.

How the value of bare ownership is calculated

The value of bare ownership is obtained by subtracting the value of the usufruct from the full value of the property. The latter depends on the age of the usufructuary and on coefficients updated periodically by the Italian Revenue Agency. As a general rule, the older the usufructuary, the lower the value of the usufruct and therefore the higher the share due to the bare owner. For precise, up-to-date calculations it is always advisable to consult a notary, who will also check the tax rules applicable at the time of the deed.

Bare ownership in Umbria: some local considerations

In the Todi area and more broadly in Umbria, bare ownership often involves historic homes or farmhouses with adjoining land. In these cases, calculating the value is more complex, as it requires taking into account the cadastral category, the presence of agricultural land, and any landscape or municipal restrictions. Before proceeding, it is advisable to obtain an up-to-date appraisal of the property and consult professionals familiar with the specifics of the local market.

If you are considering selling or purchasing a bare ownership property in the Todi area, the Todi Immobiliare team is available for an initial consultation: understanding the local context, actual market values, and the most common practices in the area can make a real difference in the decisions you are about to face.