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Spanish usufruct

What a usufruct over a Spanish asset is worth and what the bare ownership is worth, on the scale both transfer tax and inheritance tax apply.

The value of the asset and who enjoys it. The percentage comes from the age, not from what the parties agreed.
Usufruct
14%
Value of the usufruct
€42,000.00
Value of the bare ownership
€258,000.00

Rule applied: 89 minus the age, floored at 10% and capped at 70% (article 41.2).

The same usufruct under the two taxes that apply the scale
TaxUsufructValue of the usufructValue of the bare ownership
ITP (purchase)14%€42,000.00€258,000.00
ISD (inheritance or gift)14%€42,000.00€258,000.00
  • Both taxes give the same figure: the age scale is identical under transfer tax and under inheritance and gift tax.
  • You do not choose the value of the asset. For property, article 10.2 of the transfer-tax act takes the Catastro reference value, and the price or declared value only if they are higher.
  • Renouncing a usufruct you have already accepted does not undo it: article 41.6 of the transfer-tax regulation and article 51.6 of the inheritance-tax one treat it as a gift to the bare owner.
  • The valuation rule is state law and is not devolved: article 48.1 of Act 22/2009 lists what the regions may change in inheritance and gift tax (reliefs, the scale, the multipliers and rebates) and valuation is not on that list. The percentage is the same in all fifteen common-law regions, unlike forced heirship.
  • Navarre and the Basque Country have their own rules by treaty, and are outside this calculation.
Change the usufructuary or the right
Change the usufructuary or the right

Use and dwelling is not a cheaper usufruct: article 41.8 of the transfer-tax regulation and article 50 of the inheritance-tax one apply the same scale to a base cut to 75% of the asset’s value.

An educational estimate under the state valuation rules. It does not constitute tax or legal advice.

It does not work out the market value of the asset, the price a bare-ownership buyer would offer, or the average effective inheritance-tax rate.

1

What a usufruct is, and what is left in the bare ownership

Article 467 of the Civil Code defines it as the right «to enjoy another’s property with the obligation of preserving its form and substance». Two words in that sentence do all the work: another’s, because the ownership stays with someone else, and enjoy, because the usufructuary uses the thing and takes its fruits. What the owner keeps is the bare ownership: title without enjoyment. Article 469 allows it to be created in favour of one or several people, at the same time or one after another, for a fixed term or for life, and article 513 lists the seven ways it ends, starting with the usufructuary’s death and finishing with prescription. While it lasts, the value of the asset is split in two, and the law says exactly in what proportion.

2

The age scale, and why «89 minus the age» appears in no statute

Article 10.5(a) of the consolidated transfer tax act, article 41.2 of its regulation, article 26(a) of the Inheritance and Gift Tax Act and article 49(b) of its regulation all say the same thing in the same words: a lifetime usufruct is worth 70% of the total value «where the usufructuary is under twenty years of age, reducing, as age increases, in the proportion of 1 per 100 less for each further year, with a minimum limit of 10 per 100». That is where the familiar 89 minus the age comes from, because 70 plus 19 is 89. The difference between the rule and its shorthand matters at both ends. At nineteen the usufruct is still worth 70%, not what subtraction would give; and at seventy-nine it is already at 10%, so beyond that age adding years changes nothing. The bare ownership is simply the rest: if the usufruct is fourteen points, it is eighty-six.

3

A fixed-term usufruct is measured in complete years, and half a year is not half the value

Where the usufruct has a fixed term, article 41.1 of the transfer-tax regulation and article 49(a) of the inheritance-tax one value it «at 2 per 100 for each period of one year, without exceeding 70 per 100». So thirty-five years exhaust the scale and a longer term is worth no more. And there is a sentence almost nobody reproduces: «Fractions of time of less than a year shall not be counted, although a usufruct for a period of less than one year shall be counted at 2 per 100». A six-month usufruct is worth 2%, and an eighteen-month one is worth 2% as well, because a year and a half contains one complete year. There is also a mixed case, a lifetime usufruct capped in years, and for it article 41.4 gives not a formula but a choice: the bare ownership is given, of the two rules, «the one that attributes the lower value to it», which leaves the usufruct with the higher of the two percentages.

4

The two taxes give opposite answers when the usufructuary is a company

For a person the scale is identical under both taxes, and that is already the answer to whether inheriting rather than buying changes anything. For an entity it is not. Article 41.3 of the transfer-tax regulation says a usufruct in favour of a legal person created «for a term longer than thirty years or for an indeterminate time shall be treated for tax purposes as a transfer of full ownership subject to a resolutory condition»: one hundred per cent. Article 49(d) of the inheritance-tax regulation instead applies the fixed-term rules «without the usufruct being computable, in any case, at a value higher than 60 per 100», and that same cap governs where the duration is indeterminate. Forty points of difference on the same contract. The two rules meet exactly at thirty years, because 2% a year gives precisely 60%, and that threshold is no accident: article 515 of the Civil Code forbids creating a usufruct in favour of a corporation or company for more than thirty years.

5

When the usufruct ends, each tax looks at a different end of time

On the usufructuary’s death or the expiry of the term, the bare owner becomes full owner and pays for the part not assessed at the time. Article 14.1 of the consolidated act states it and article 42.2 of the regulation makes it concrete: the outstanding percentage «shall be applied to the value the assets have at the moment of consolidation of ownership and at the rate of tax in force at that moment». Inheritance tax does the opposite. Article 51.2 of its regulation requires the first bare owner to pay «on the base of the value attributed to it at its constitution» and at the same average effective rate as the original split. So transfer tax looks at today’s value and today’s rate, and inheritance tax at those of the time. And there is a second rule that gets forgotten: where consolidation comes not from the term or the usufructuary’s death but from another transaction, articles 42.3 and 51.4 demand the greater of the two assessments, not the one for the new transaction.

Worked example

An example, and it is the calculator’s opening state. A flat worth 300,000 euros and a 75-year-old widow who keeps the usufruct. The article 41.2 scale gives 89 minus 75, that is fourteen points: the usufruct is worth 42,000 euros and the bare ownership 258,000, and the two figures add up to the flat. Both taxes agree, because the usufructuary is a person. If the usufruct were held by a company for forty years, transfer tax would see a transfer of full ownership worth 300,000 euros while inheritance tax would stop at 60%, that is 180,000 euros: a hundred and twenty thousand euros of difference on the same contract. And years later, when she dies, the child who held the bare ownership pays for the fourteen points left outstanding: if the flat was split when it was worth 200,000 euros and is worth 500,000 today, the base is 95,000 euros if that was a purchase and 38,000 if it was an inheritance, on exactly the same facts.

Frequently asked questions

How is the value of a Spanish usufruct worked out?
If it is for life, by subtracting the usufructuary’s age from 89, capped at 70% and floored at 10%. At 60 the usufruct is worth 29% of the asset and the bare ownership 71%. If it is for a fixed term, at 2% for each complete year and never above 70%. The rule is in article 10.5(a) of the consolidated transfer tax act and, in the same words, in article 26(a) of the Inheritance and Gift Tax Act, so the figure does not depend on whether the asset is bought, inherited or given.
What is the bare ownership worth?
Whatever is left. Article 41.4 of the transfer-tax regulation says that «the value of the right of bare ownership shall be computed as the difference between the value of the usufruct and the total value of the assets», so it has no calculation of its own. On a flat worth 300,000 euros with a 75-year-old usufructuary, the usufruct is 42,000 and the bare ownership 258,000. There is one exception: in a usufruct that is both for life and for a term, the bare ownership is given the lower of the two possible values, which leaves the usufruct with the higher percentage.
Does the calculation change from one Spanish region to another?
No. Article 48.1 of Act 22/2009 lists what the regions may regulate in inheritance and gift tax (reliefs against the taxable base, the scale, the pre-existing-wealth bands and multipliers, and rebates against the tax due) and the valuation of rights is not on that list. The percentage is the same in all fifteen common-law regions. What does change from one to another is the rate and the rebates applied afterwards, which is a different thing. Navarre and the Basque Country have their own rules by treaty.
I inherited the bare ownership of a flat. Will I pay again when the usufructuary dies?
Yes, and that is the point that surprises people most. On inheriting, tax was assessed on the value of the bare ownership, not of the whole flat, so the percentage that belonged to the usufruct at that moment stays outstanding. When it ends, article 51.2 of the inheritance-tax regulation requires the bare owner to pay on that percentage, on the value attributed to the usufruct when it was created and at the same average effective rate as then. It is not a new tax: it is the other half of the one already assessed.
What if I bought the bare ownership instead of inheriting it?
Then the base is worked out the other way round and usually comes out much higher. Article 42.2 of the transfer-tax regulation applies the outstanding percentage «to the value the assets have at the moment of consolidation of ownership and at the rate of tax in force at that moment», that is, to today’s value. On a flat split when it was worth 200,000 euros and worth 500,000 today, with fourteen points outstanding, the base is 70,000 euros by the transfer-tax route and 28,000 by the inheritance-tax one. The same facts, two rules looking at opposite ends of time.
Which value of the property has to be used?
Not the one the parties decide. Since the Act 11/2021 reform, article 10.2 of the consolidated transfer tax act takes the Catastro reference value at the date of accrual as the base, and only where the declared value or the agreed price is higher is the greater of those magnitudes taken. If the property has no reference value, the rule falls back to the greatest of declared value, price and market value. The usufruct percentage is applied afterwards, to that figure.
Can a company hold a usufruct?
Yes, but with two limits, and the two taxes do not read them the same way. In civil law, article 515 of the Civil Code forbids creating a usufruct in favour of «a town or corporation or company for more than thirty years». In tax law, article 41.3 of the transfer-tax regulation treats that situation as a transfer of full ownership subject to a resolutory condition, that is 100% of the value, while article 49(d) of the inheritance-tax regulation never allows more than 60% to be computed. Below thirty years the two agree on the 2%-a-year scale.
I hold a usufruct and want to give it up so my child owns the flat outright. Is that free?
No. Article 41.6 of the transfer-tax regulation and article 51.6 of the inheritance-tax one say the same thing word for word: «The renunciation of a usufruct already accepted, even if pure and simple, shall be treated for tax purposes as a gift from the usufructuary to the bare owner». Accepting and then renouncing undoes nothing, it creates a second taxable event, and what is given is whatever the usufruct is worth at that moment. Not accepting it in the first place is a different legal situation, and worth taking advice on before signing anything.
Is a right of use and dwelling valued the same way?
On the same scale, but on a reduced base. Article 41.8 of the transfer-tax regulation and article 50 of the inheritance-tax one apply to 75% of the value of the assets «the rules corresponding to the valuation of term or lifetime usufructs, as the case may be». So a lifetime right of use held by someone of 75 is worth 14% of three quarters of the flat, that is 10.5% of the total. It is not a cheaper usufruct: it is the same scale applied to less base, because the right is narrower.
What if the usufruct is held by two people, or passes from one to another?
Article 41.5 settles it with two rules. In successive usufructs the bare ownership is worked out using the usufruct with the largest percentage, and when that one ends the bare owner pays for the increase in value their right experiences, and so on with the rest. And where the usufruct is created in favour of both spouses at once the same rule applies, «but an assessment for consolidation of ownership shall only be made when the last of them dies». In other words, the death of the first opens no assessment at all.

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Author: Thorben Rasmus Idel · Reviewed by: Nahar Geva · Last reviewed: