Constitution of usufruct

In favor of a third party

The full ownership is dismembered into bare ownership and usufruct. The owner creates “ex novo” the right of usufruct that did not exist previously, so it is not transferred, but rather constituted.

For a fee

By acts inter vivos (sale for price)

Real estate capital gains ( IRPF ):

• Amount paid for all purposes by the person in whose favor the right is established.

  If the person in whose favor the right is established is the spouse or a relative, including those by marriage, up to the third degree inclusive, the total net income may not be less than the imputed income derived from said property (article 85 of the Tax Law).

• If a life usufruct is established in favor of a third party, a 30% reduction may be applied for income obtained in a notoriously irregular manner over time. [Article 23.3 of the Personal Income Tax Law and 15.c) of its Regulations].

The holder of the right of usufruct (and not the bare owner) is the one who has the right of use and enjoyment and receives the fruits of the property, for which reason the following income is attributed to him in the IRPF :

A. If you lease or transfer the property: Real estate capital gains .

To calculate the net return on real estate capital, it must be taken into account that the tax-deductible amortization is that which corresponds to the right of usufruct [article 23.1.b) of the Personal Income Tax Law and 14.3 of its Regulations], which will be:

• Temporary usufruct: acquisition cost divided by the number of years of duration

• Usufruct for life: 3% of the acquisition cost satisfied

B. If the property is at your disposal and is not rented or transferred: Imputation of real estate income .

• 2%, in general. This percentage must be applied to the cadastral value of the property that appears on the IBI receipt for the year.

• 1.1% in the following cases:

  1. Properties whose cadastral values have been revised, modified or determined through a general collective valuation procedure, in accordance with cadastral regulations and have come into force in the tax period or within the period of the ten previous tax periods.
  2. Properties that, on the accrual date of IRPF (normally, December 31), had no cadastral value or this has not been notified to the owner.

Free of charge

a. By acts inter vivos

b: For acts mortis causa:

- Intestate succession (widow's usufruct)

- Testament

A. If it can be proven that the constitution of the usufruct was free of charge or if the usufructuary paid taxes in the ISD due to the constitution of the usufruct right

By inter vivos acts (donation) : obtains returns on real estate capital which, when the gratuity is accredited, are limited to the imputation of the net return provided for in article 85 of the Tax Law during each of the years of duration of usufruct.

B. By mortis causa: They do not pay IRPF .

If it cannot be proven that it was free of charge

Unless there is proof to the contrary, it is presumed that the creation of the usufruct right is remunerated (article 6.5 of the Personal Income Tax Law ) and therefore gives rise to the obtaining of real estate capital income , which must be valued, in accordance with article 40 of the Personal Income Tax Law , at the normal market value, without prejudice to the application of the minimum income rules in the case of creation of usufruct in favor of the spouse or a relative, including by marriage, up to the third degree inclusive (article 24 of the Personal Income Tax Law ) or the application of a 30% reduction for income obtained in a notoriously irregular manner over time in the case of life usufruct (article 15 of the Personal Income Tax Regulations ).