The usufruct is a figure that generates surprises from the fiscal point of view. I think it is because it is used for purposes other than its own, which are none other than attributing the use and enjoyment of a good.
From what I have been perceiving throughout my professional life, the causes of these surprises derive from when it was not very well known how to involve someone in an operation, a usufruct right has been annulled.
Thus, it has been very frequent that when parents have helped their children to buy a home, as a guarantee that the child must count on them to carry out any act of disposition on it, they have reserved a right of usufruct.
Also, I have perceived the erroneous idea that by paying the parents for a house, if they put it in the name of the children, reserving the usufruct, the issue of the fiscal cost of the succession is already solved, so that when the parents die, the house would remain in the son's name without having to pay anything.
It is true that these are beliefs that are deeply rooted in the conscience of the people, but in my opinion, they have also been encouraged by people who fulfill an advisory function.
The usufruct and habitual residence
The consequences of the practices to which we have referred in the previous section are, on the one hand, that if there is a usufruct right that falls on a dwelling, since the bare owner does not have the right to use and enjoy it, he lacks a title that Allow me to say that this house, which belongs to you, is your habitual residence.
The consequence of this was in other times, that the son could not resort to the deductibility in the IRPF of the amounts invested in the acquisition of the habitual residence.
The reason was that according to the personal income tax law, acquisition of habitual residence is understood, for the purposes of deduction, the acquisition in the legal sense of the right of ownership or full ownership of the same, even if this be shared, regardless of the legal transaction that originates it.
It is true that this is a matter of the past, since home purchases as of January 1, 2013They do not grant the right of deduction, but I can say that there were neither one nor two people who consulted, how could I resolve this issue, which necessarily led to the extinction of the usufruct right, either through its purchase, or in its conversion in a room right, but in any case with tax costs.
The same or similar problems can be raised, today, in other types of taxes, in which the tax benefits are conditional on the fact of acquiring a habitual residence, as would be the case of the reduced rates in the ITP of some autonomous communities.
Upon expiration of the usufruct, taxes are paid
On the other hand, there have been enormous surprises, when the usufruct has been extinguished due to the death of the parents, the children have had to pay a tax again, to a greater or lesser extent, depending on whether the usufruct derives from a sale or from a succession- donation.
In this entry we are only going to refer to the extinction of the usufruct that derives from a sale and that is extinguished by the death of the usufructuary.
Well, in the event that the children have purchased a home or other property, and the parents have simultaneously acquired the usufruct right, the extinction of the same accrues the ITP, which is calculated in accordance with the provisions of article 42 of the Patrimonial Transfer Tax Regulation, cumbersome to read, and not easy to understand, which says:
“When the domain is consolidated, the bare owner will pay for this tax based on the value of the right that enters into his heritage. In the consolidation of the dismembered domain by onerous title, provided that the consolidation occurs due to compliance with the established term or by death of the usufructuary, the bare owner will be required, for the same concepts and title for which it acquired, in its day, the bare property, the liquidation corresponding to the extinction of the usufruct on the percentage for which the tax has not been liquidated when the bare ownership was acquired, which percentage will be applied to the value of the assets at the time of the consolidation of the domain and by the type of lien that was in force at this time.”
An example.
Let's try to explain it with an example of these days. In 1988, a 55-year-old father and son bought a rustic farm for 50,000 euros. At that time they paid the transmission tax at the current rate (7%) on 50,000 euros, that is, 3,500 euros. When the father dies, the son must pay for the extinction of the usufruct, which is calculated, as the transcribed precept says, on the percentage for which the tax has not been paid when the bare ownership was acquired, which percentage will be applied on the value of the assets at the time of the consolidation of the domain and by the type of lien that was in force at this time.
At the time of the father's death, the estate had a value of 145,000 euros, and the percentage that the usufruct represented at the time of its constitution will be applied to this value. The value of the usufruct results from the following rule. Value of the usufruct = 89-age of the usufructuary on the date of constitution = % on the value of the property.
Therefore, since the father was 55 years old at the time of purchase, the value of the usufruct is 89-55, that is, 34%, which is applied to the value of the property at the time of death, that is, to 145,000, which gives 49,300 euros, and on this amount the transfer tax would be paid, at the current rate today, that is, a 10%. In accordance with this, the son upon the death of the father has had to pay 4,930 euros in taxes, without the right to any reduction, and regardless of the inheritance tax.
A recommendation
I end by pointing out that these lines are not an in-depth analysis of the taxation of the right of usufruct, but a call to attention to the need for correct advice.
In Lleida on March 11, two thousand and fifteen.
