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V3455-16 20 July 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · usufructo vitalicio

Donating property usufruct generates income tax for the donor and inheritance tax for the daughter

Parents have enquired about the taxation of donating the life or temporary usufruct of a property to their daughter. The DGT indicates that donors must report real estate capital income in their Personal Income Tax (IRPF) returns, while the daughter must pay Inheritance and Gift Tax (ISD).

The question raised

Taxation of the transaction, for both the donors and the donee.

The DGT's ruling

For the donors, the creation of the usufruct generates a return on real estate capital which must be valued at market price, unless its gratuitous nature is proven, in which case the net return under Article 85 of the Personal Income Tax Law (LIRPF) shall be imputed. For the donee, the acquisition of the usufruct is subject to Inheritance and Gift Tax, with the daughter being the taxable person and the tax base being that determined by Article 26 of the Inheritance and Gift Tax Law (LISD).

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