Some Special Rules

As the inheritance tax could be quite high, it is possible, at the time of the purchase of an asset, to divide the rights of the property between the nuda propiedad, and the usufructo (the right to use the asset, usually for a lifetime), so upon the death of the usufructuario, the nudo propietario acquires all the rights over the asset. There is no inheritance tax in this case. The beneficiary must only pay for the amount of tax that he or she hadn’t paid at the time of purchase and for the value that the usufructo has at that time. As the usufructo generally is a right that lasts the lifetime of the usufructuario, its value depends on the age of the usufructuario at the time of purchase as a percentage of the total value of the assets equal to the number of years that remain till 90 years of age ( minus one).

So for a 50 year old usufructuario, at the time of purchase, the tax to be paid for the purchase will be divided between the purchaser nudo propietario (61%) and the usufructuario (39%), so at the death of the usufructuario the nudo propietario will pay over the 39% of the value of the asset which hadn’t been paid before, at a rate of 8% (at the time of writing) of the total value of the purchase.So, if this operation is carried out and the usufructuario passes away within three years of the purchase, it will be presumed to be an asset entirely of the usufructuario, and inheritance tax will be paid if the nudo propietario who benefits is an inheritor (ascendant, descendant, relative up to grade three, the spouse of any of these) of the deceased.

In the same case if the existing owner transfers the nuda propiedad, retaining the usufructo, inheritance tax will be paid on the complete value of the asset if he or she passes away during the following four years.

The same applies if he or she exchanges a property for a right of usufructo over an asset of the acquirer or reserves any other lifetime right, except for agreements of lifetime insurance instalments reached with entities which legally undertake such operations.

Finally, it will generally be presumed that the assets are still the property of the deceased if they were his property in the year before his death and are now becoming the property of an heir (legatee, relative up to grade three, the spouse of any one of these) of the deceased. This presumption will not hold if it can be proved that the assets were effectively sold and that the money is in the estate.