Tax treatment of the sale of real estate with usufruct and bare ownership

The transfer of real estate subject to a split of ownership—that is, where usufruct and bare ownership coexist—raises questions regarding how the corresponding tax should be settled. A recent binding ruling from the Dirección General de Tributos (DGT) has clarified the procedure for declaring these operations in Personal Income Tax (IRPF).

What the DGT has resolved

The advisory body has determined that the sale of real estate with this legal structure generates a capital gain or loss individually for each of the holders of the rights. Specifically, the resolution establishes that:

• The portion of the gain or loss corresponding to the bare ownership must be attributed to the holder of said right.
• The portion derived from the usufruct must be attributed to the usufructuary.
• The calculation of each amount must be carried out independently, based on the acquisition and transfer values corresponding to each right.
• The resulting gain from this process will be integrated into the taxpayer's savings tax base.

What it means for you

If you are the owner of the bare ownership or the holder of the usufruct of an asset and decide to sell it, you cannot make a single or joint declaration that ignores the nature of your rights. The IRPF regulations (Law 35/2006) and the General Tax Law require each holder to assume their own tax burden. This implies that the transfer value and the acquisition value must be strictly broken down according to the ownership of each right to avoid errors in determining the tax base.

What you should do

In an operation of this type, it is necessary to have the documentation that proves the acquisition and transfer values of each right separately. The correct determination of these values is fundamental for the precise calculation of the capital gain or loss. Given that each legal situation may present technical nuances, it is necessary to assess each case individually to ensure compliance with tax obligations.