Calculation of capital gains following the extinction of a usufruct

Determining the capital gain in the transfer of real estate that has been subject to a usufruct regime raises technical doubts regarding which values to apply for the calculation of Personal Income Tax (IRPF). A recent binding ruling from the Dirección General de Tributos (DGT) has clarified the criteria for this scenario.

What the DGT has ruled

The ruling focuses on the calculation of the capital gain obtained in the transfer of a home following the extinction of the usufruct. The DGT establishes that the acquisition value of the portion received through inheritance shall be that resulting from applying the rules of Inheritance and Gift Tax, with the market value as a limit, increased by the investments, improvements, and inherent expenses made.

Furthermore, the authority clarifies that the extinction of the usufruct due to the death of the usufructuary does not imply a new acquisition of the property, but rather the recovery of the rights of use and enjoyment by the bare owner. Regarding the transfer value, the administration indicates that only expenses and taxes inherent to the sale may be deducted, excluding current expenses such as Property Tax (IBI) or waste collection fees.

What this means for you

If you are the bare owner of a property and it becomes consolidated in your assets following the death of the usufructuary, you must take special care when calculating the capital gain in the event of a sale. Errors in including current expenses or in the interpretation of the acquisition by inheritance can alter the savings tax base.

This criterion directly affects individuals managing the transfer of real estate where full ownership was not held until the moment of sale, impacting the final amount of tax to be paid.

What you should do

It is necessary to analyze the inheritance documentation and the invoices for improvements made to ensure that the acquisition value is correct. Since the regulations are based on the IRPF Law and the Civil Code, each situation requires a detailed analysis of the expenses that are truly considered inherent to the transfer to avoid contingencies with the Tax Administration.