Tax Guide for Bare Ownership in Spain: Everything You Need to Know

Understanding the tax implications of bare ownership is one of the most important aspects for both sellers and buyers. Knowing which taxes apply, who pays them, and what exemptions are available can save you thousands of euros. This comprehensive guide covers everything you need to know about the taxation of bare ownership in Spain.

Tax Summary Overview

Before diving into the details, here’s a summary of the main taxes and who pays them:

Tax	Who Pays?	When?	Approximate Amount
ITP (Transfer Tax)	Buyer	At purchase	6–10% of fiscal value
Municipal capital gains (Plusvalía)	Seller (unless agreed otherwise)	At sale	Variable by municipality
IRPF (Income Tax / Capital Gains)	Seller	Annual tax return	19–26% (exemptions possible)
IBI (Property Tax)	Usufructuary	Annually	Variable by municipality
Notary fees	Both parties	At signing	€600 – €1,200
Land Registry	Buyer	After signing	€200 – €500

Transfer Tax (ITP): The Buyer’s Main Tax

The Transfer Tax (Impuesto sobre Transmisiones Patrimoniales) is the most significant tax in a bare ownership transaction and is paid by the buyer.

How Is ITP Calculated for Bare Ownership?

The ITP is calculated on the fiscal value of the bare ownership, not on the full property value. This is determined using the Rule of 89:

1. Determine the reference value of the property (Cadastral value or purchase price, whichever is higher)
2. Calculate the usufruct value based on the usufructuary’s age
3. Subtract the usufruct value from the total to obtain the bare ownership fiscal value
4. Apply the ITP rate for the relevant autonomous community

The Rule of 89

Usufruct value (%) = 89 – Age of the usufructuary

With a minimum of 10% (for ages 79+) and a maximum of 70% (for ages under 20).

Usufructuary’s Age	Usufruct Value	Bare Ownership Value
65 years	24%	76%
70 years	19%	81%
75 years	14%	86%
79+ years	10% (minimum)	90%

ITP Rates by Autonomous Community

ITP rates vary by region in Spain:

Autonomous Community	General ITP Rate
Madrid	6%
Catalonia	10%
Andalusia	7%
Valencia	10%
Basque Country	4% (Álava), 7% (Bizkaia, Gipuzkoa)
Galicia	8%
Castilla y León	8%
Balearic Islands	8–13% (progressive)
Canary Islands	6.5%
Murcia	8%
Aragón	8%
Extremadura	8%
Asturias	8%
Cantabria	10%
La Rioja	7%
Castilla-La Mancha	9%
Navarra	6%

Practical Example: ITP Calculation

Scenario: You purchase the bare ownership of a property in Madrid. The usufructuary is 75 years old. The property’s reference value is €300,000.

1. Usufruct value: 89 – 75 = 14% → €42,000
2. Bare ownership value: 86% → €258,000
3. ITP rate in Madrid: 6%
4. ITP payable: 6% × €258,000 = €15,480

Compare this with the ITP on the full property: 6% × €300,000 = €18,000. You save €2,520 on ITP alone.

Important: Minimum Taxable Base

Tax authorities may apply a minimum reference value (valor de referencia) established by the Cadastral Office. If this reference value is higher than the price paid, the ITP will be calculated on the reference value. Always verify the reference value before purchasing.

Municipal Capital Gains Tax (Plusvalía Municipal)

The plusvalía municipal (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana) is paid by the seller and taxes the increase in land value since the property was acquired.

How Is It Calculated?

Following a 2021 Constitutional Court ruling, municipalities now offer two calculation methods, and the taxpayer can choose the more favourable one:

Method 1: Objective (traditional)

• Based on the cadastral land value and years of ownership
• Uses coefficients established by each municipality

Method 2: Real gain

• Based on the actual capital gain (sale price minus acquisition cost)
• The proportion attributable to land value is applied

Exemptions and Reductions

• No gain, no tax: if the sale price is lower than the acquisition cost, no plusvalía is due
• Primary residence for seniors 65+: certain municipalities offer reductions
• Reinvestment exemption: if the seller reinvests in a new primary residence (not applicable to bare ownership sales where the seller retains usufruct)

Practical Note

The plusvalía can range from a few hundred to several thousand euros depending on the municipality, years of ownership, and land value. Your notary or tax advisor can calculate the exact amount.

Income Tax (IRPF): Capital Gains for the Seller

When selling bare ownership, the seller may generate a capital gain subject to income tax (IRPF).

How Is the Capital Gain Calculated?

Capital gain = Sale price – Acquisition value (adjusted)

The acquisition value includes:

• Original purchase price
• Purchase taxes and fees (ITP, notary, registry)
• Cost of improvements (documented)
• Inflation adjustments for properties acquired before 1994

Capital Gains Tax Rates (2025)

Capital Gain Amount	Tax Rate
First €6,000	19%
€6,001 – €50,000	21%
€50,001 – €200,000	23%
€200,001 – €300,000	27%
Over €300,000	28%

Key Exemption: Over 65 and Primary Residence

This is the most important tax benefit for bare ownership sellers. If the seller meets BOTH conditions:

1. Age 65 or older at the time of sale
2. The property is their primary residence (habitual dwelling for at least 3 years)

Then the capital gain is fully exempt from IRPF. This is regardless of the amount.

Example:

• María, 72, sells the bare ownership of her primary residence for €180,000
• She acquired the property 30 years ago for €30,000 (adjusted to €50,000)
• Capital gain: €180,000 – €50,000 = €130,000
• Tax due: €0 (exempt as 65+ selling primary residence)

Without the exemption, the tax would have been approximately €28,500.

Reinvestment Exemption (Under 65)

If the seller is under 65, the capital gain can be exempt if the proceeds are reinvested in a new primary residence within 2 years. However, this exemption is generally not applicable to bare ownership sales because the seller continues living in the same property via the usufruct.

Property Tax (IBI): The Usufructuary’s Responsibility

The annual property tax (Impuesto sobre Bienes Inmuebles) is paid by the usufructuary, not the bare owner. This is established by Article 499 of the Civil Code, which assigns ordinary expenses to the usufructuary.

Key Points

• The IBI is based on the cadastral value of the property
• Rates vary by municipality (typically 0.4–1.1%)
• The usufructuary is the legal taxpayer during the usufruct period
• Upon consolidation of full ownership, the new owner assumes IBI payments

Common Issue

Some municipalities may initially send the IBI bill to the bare owner (as the registered title holder). It’s important to ensure the usufruct is properly registered so that the tax is correctly directed to the usufructuary.

Notary and Registry Fees

Notary Fees

Notary fees are regulated by law and depend on the transaction value:

Transaction Value	Approximate Notary Fee
Up to €100,000	€400 – €600
€100,001 – €200,000	€600 – €800
€200,001 – €400,000	€800 – €1,100
Over €400,000	€1,100 – €1,500

Notary fees are typically shared between buyer and seller, with each party paying for their copy of the deed.

Land Registry Fees

Registration fees are paid by the buyer and typically range from €200 to €500, depending on the property value.

Wealth Tax (Impuesto sobre el Patrimonio)

For the Bare Owner

The bare ownership must be declared in the wealth tax return at its fiscal value (using the Rule of 89). This is typically lower than the full property value, reducing the tax burden.

For the Usufructuary

The usufruct must also be declared at its fiscal value. As the usufructuary ages, the declared value decreases (because the usufruct percentage decreases under the Rule of 89).

Wealth Tax Thresholds

Wealth tax thresholds and rates vary by autonomous community. In Madrid, there is effectively a 100% tax credit (no wealth tax). In Catalonia, the threshold starts at €500,000 with progressive rates.

Tax Planning Strategies

For Sellers

1. Wait until 65: if you’re close to 65, waiting ensures full capital gains exemption on your primary residence
2. Document improvements: keep receipts for any renovations, as these increase your acquisition cost and reduce your capital gain
3. Choose the right plusvalía method: ask your tax advisor to calculate both methods and choose the lower amount
4. Consider timing: selling late in the year may defer some tax obligations

For Buyers

1. Verify the reference value: check the cadastral reference value before purchasing to avoid surprises with ITP
2. Check regional ITP rates: some regions offer lower rates or reductions for young buyers
3. Factor in all costs: include ITP, notary, registry, and potential legal fees in your investment calculations
4. Declare at fiscal value: for wealth tax, declare the bare ownership at its fiscal value (not the market price paid)

Taxes Upon Consolidation

When the usufruct ends and the bare owner becomes the full owner, there is no additional tax event. The consolidation happens by operation of law, and no transfer tax, capital gains, or other taxes are triggered.

However, once you have full ownership:

• You become liable for IBI and other property taxes
• If you sell the property later, capital gains tax will apply (calculated from the original bare ownership acquisition cost)
• The property is now declared at full value for wealth tax purposes

Frequently Asked Tax Questions

Do I need to file a tax return for buying bare ownership?

The ITP is filed separately (within 30 days of signing). For your annual IRPF return, you must declare the bare ownership as an asset but there is no immediate income to declare.

Can the usufructuary deduct property expenses?

Yes. If the usufructuary rents out the property, they can deduct ordinary expenses (IBI, community fees, maintenance) against the rental income in their IRPF return.

What happens if the usufructuary stops paying IBI?

The bare owner could be held subsidiarily liable by the municipality. It’s advisable to include a clause in the deed requiring the usufructuary to prove annual IBI payment.

Conclusion

The tax implications of bare ownership are generally favourable for both parties:

• Sellers over 65 can be fully exempt from capital gains tax on their primary residence
• Buyers pay ITP on the reduced bare ownership value, not the full property value
• No taxes are triggered when full ownership is consolidated

Proper tax planning can save thousands of euros. We always recommend consulting with a qualified tax advisor familiar with bare ownership transactions.

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