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Practical Income Manual 2021.

Usufruct and dismemberment of property: concept and definitions

USUFRUCT ON REAL ESTATE Personal Income Tax . Table I

Full ownership : Article 348 of the Civil Code: "Property is the right to enjoy and dispose of something, with no limitations other than those established by law."

Domain dismemberment : The dismemberment of the full domain (property) entails the separation of the powers that make up the right of property through the constitution of real rights of enjoyment over the property (right of usufruct, rights of use and habitation and easements) and the right of nuda property.

Usufruct : The right of usufruct grants the power to use, enjoy and exploit other people's property without altering its form or substance (articles 467 to 522 Civil Code).

Bare property : Bare ownership constitutes the right to fully enjoy ownership of the property when the usufruct expires. While the usufruct lasts, the bare owner only has the power to dispose of the property but not the use, enjoyment and exploitation of it.

Domain Dismemberment
  • The owner reserves bare ownership and establishes a right of usufruct in favor of a third party : The person in favor of whom the usufruct is constituted as beneficiary must pay tax for ITP or ISD (depending on whether the constitution of the usufruct in his favor has been for consideration or profit). The owner obtains income from real estate capital in Personal Income Tax through the constitution of the usufruct.

  • The owner transfers bare ownership and reserves the usufruct : The acquirer of the bare ownership must pay taxes for the transmission by ITP or ISD (depending on the onerous or gratuitous nature of the transmission) and the owner is subject to Personal Income Tax for the capital gain or loss generated by said transmission. However, no taxation or taxable event occurs for the usufruct right that remains in the power of its owner.

  • The owner constitutes the usufruct and transmits the bare ownership to different people : Each of the acquirers must pay taxes for ITP or ISD (depending on the onerous or gratuitous nature) for the constitution of usufruct, and for the transfer of bare property. The owner, except in cases of mortis causa succession, obtains income from real estate capital in Personal Income Tax through the constitution of the usufruct and through the transfer of bare ownership in Personal income tax a capital gain or loss.


Valuation of usufruct rights (Articles 49 and 51 Regulation of the ISD and articles 10 consolidated text of the Law of ITPAJD )

  • Temporary usufruct : It will be considered proportional to the total value of the assets on which it falls, at a rate of 2 percent for each period of one year, without exceeding 70 percent. Fractions of time less than a year will not be computed, although usufruct for a period of less than one year will be computed at 2 percent of the value of the assets.

  • Lifetime usufruct : It will be estimated that the value is equal to 70 percent of the total value of the assets when the usufructuary is less than twenty years old, reducing the percentage in the proportion of 1 percent for each more year, with the minimum limit of 10 percent. . (Practical rule for calculating usufruct: Subtract the age of the usufructuary from the number 89. The result of this operation gives us the percentage of the usufruct value: [(89 - age of the usufructuary) / 100]).

  • Other types of usufruct :

    • Lifetime usufructs which in turn are temporary (Article 49.c) Regulations of ISD )

    • Usufruct in favor of a legal entity (Article 49.d) Regulations of the ISD )

    • Usufruct with a resolutory condition other than the life of the usufructuary (Article 51.7 Regulations of the ISD )

    • Successive usufruct (Article 51.5 Regulations of ISD )

    • Usufruct constituted in favor of spouses (Article 51.5 Regulations of ISD )

Bare property

The value of the bare property will be computed by the difference between the value of the usufruct and the total value of the assets.

This table is for informational purposes only.