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2021 Wealth Tax practical guide.

7. Temporary or life annuities

Regulations: Art. 17.Dos Wealth Tax Act

We must distinguish:

  • In general terms, the valuation of temporary or life annuities constituted as a result of the delivery of a capital, whether in money, movable or immovable property, the holder of which corresponds to the declarant must be made by the result of capitalizing the annuity at the interest rate legal entity for the money in force at the accrual date of this tax (31 December) and taking the resulting capital from the party that, according to the rules established to assess the usufructs correspond to the age of the annuity, if the annuity is a life annuity, or the duration of the annuity, if temporary.

    The rules for valuing usufructs can be found in the section "Real rights of use and enjoyment (excluding those that , if applicable, fall on the main residence of the taxpayer), "which is discussed in Chapter 3 of this Manual.

    For 2021, the legal interest rate of the money was set at 3%. 100 

    When the amount of the income is not quantified in monetary units, the valuation will be obtained by capitalizing the amount of 7,908.60 euros, the amount of the public indicator of multi-effect income (IPREM) for 2021.

  • As an exception, when income, temporary or life annuities are received from life insurance, these will be calculated based on the value established in the valuation rule for life insurance policies in the taxable income of the recipient. In other words, they will be counted for their redemption value at the time of the accrual of the tax and, from 11 July of 2021, in cases where the policyholder does not have the right to exercise the full right of redemption on the date of accrual of the tax, for the value of the mathematical provision on the aforementioned date in the policyholder's taxable base.


Mr. M.P.S., aged 60 at 31 December 2021, transferred the flat in which he lived in exchange for a life annuity of 12,000 euros a year. The legal interest of money in 2021 was 3%. 100 

Determine the value by which this life annuity must be declared in the Wealth Tax.


Capitalisation of the income received:

12,000 X (100 ÷ 3) = 400,000 euros

The percentage corresponding to the lifetime usufruct is applied according to the age of the annuity:

(89-60) = 29%

Value of the life annuity:

29% Of 400,000 = 116,000 euros