Owners of assets with usufruct will maintain the original acquisition date after the death of the usufructuary

The tax treatment of assets that have been subject to a dismemberment of ownership, such as usufruct, raises frequent doubts when calculating capital gains for Personal Income Tax (IRPF). A recent resolution from the Dirección General de Tributos (DGT) has clarified how the acquisition date and the value of these assets should be determined when the usufruct is extinguished due to death.

What the DGT has resolved

The DGT has determined that the extinction of the usufruct due to the death of the usufructuary does not represent a new acquisition of the property for the bare owner. Instead, this event is considered the recovery of the rights of enjoyment by the original owner.

Consequently, the acquisition date of the consolidated part (full ownership) is not the date of the usufructuary's death, but rather the date on which the bare ownership was acquired—that is, the date of the death of the original decedent. Regarding the acquisition value, the administration establishes that the provisions of the Inheritance and Gift Tax rules must be applied to each element: the bare ownership, the usufruct, and the subsequent full ownership, while also adding any expenses and improvements made.

What this means for you

If you are an individual who has inherited assets with dismemberment of ownership, this criterion is fundamental for calculating capital gains or losses in the event of a sale. Since it is not considered a new acquisition, you cannot use the date of the usufructuary's death to restart the holding period of the asset.

This implies that the period of possession for tax purposes is longer than it might appear at first glance, which is a determining factor in the application of IRPF calculation rules. The value you must declare as the acquisition value will be the result of the valuation of the elements at the time of the original succession, integrating the associated expenses.

What you should do

It is necessary to review the documentation from the original succession to precisely identify the acquisition date of the bare ownership and the values assigned at that time. Since the calculation of capital gains depends on the correct integration of the values of the bare ownership, the usufruct, and the full ownership, it is recommended to assess each particular situation to avoid errors in the tax settlement upon a future transfer.