A growing trend among people over 65

Many older adults in Spain find themselves in a similar situation: they own their home outright but have limited income to support their desired quality of life in retirement. Traditional solutions—like downsizing or renting out the home—are often not desirable due to emotional attachments or practical limitations.

This has led to the increasing popularity of a lesser-known legal and financial option: selling the bare ownership of the property while retaining lifetime usufruct, which means the seller keeps the right to live in the home for the rest of their life. This arrangement allows the homeowner to receive a lump sum or capital injection without needing to move out, making it a highly appealing choice for many seniors.

But as with any financial decision involving real estate, taxation is a key consideration. How is this transaction treated under the Spanish IRPF (Impuesto sobre la Renta de las Personas Físicas)? Is it treated like any other sale? What exemptions might apply?

The short answer: yes, it is taxed—but differently, and in many cases, especially for people over 65, it can bring notable tax advantages.

For a more detailed breakdown of this topic, you can consult this complete guide on sale of property with usufruct and bare ownership IRPF.

Understanding bare ownership and usufruct

To make sense of the tax implications, it’s important to understand the structure of the transaction.

A property owner typically holds full ownership, which includes two components:

• Usufruct: the right to live in or use the property.

• Bare ownership: the legal title or ownership of the asset, without the right to use it.

In this kind of operation, the seller gives up the bare ownership while retaining the usufruct, usually for the rest of their life. The buyer becomes the legal owner, but cannot take possession or use the property until the usufruct ends—generally when the original owner passes away.

This model provides mutual benefits:

• The seller gets liquidity while keeping the right to stay in the home.

• The buyer acquires property at a discount, knowing they’ll take full ownership in the future.

Tax treatment in the IRPF

Let’s break down how this type of sale is treated under Spanish income tax law.

1. If the seller is over 65 and it’s their main residence:

The gain from the sale of the bare ownership is exempt from IRPF. This is a major benefit and one of the reasons this model is so attractive to older homeowners.

2. If it is not the main residence, or the seller is under 65:

The seller must declare the capital gain derived from the sale in their income tax return, under the savings income category. This will be taxed progressively depending on the amount of gain.

3. How is the gain calculated?

Only the portion of the property sold—the bare ownership—is considered. The capital gain is calculated as:

Sale value of the bare ownership – Acquisition cost of the equivalent portion

Note that any notary or legal expenses related to the original purchase or the current sale can often be factored in to reduce the gain.

Additional tip:

In some autonomous regions of Spain, regional tax benefits or inheritance rules may also apply. It’s strongly recommended to check with a local tax advisor before finalizing the transaction.

What are the practical advantages of this model?

• Stay in your home for life: The seller can continue living in the property without changes to their routine or lifestyle.

• Immediate liquidity: Receive a substantial lump sum without taking on loans or debt.

• No monthly repayments: Unlike a reverse mortgage, there are no interest rates or repayment schedules.

• Potential IRPF exemptions: Especially favorable for those over 65, when selling their primary residence.

This makes it a valuable alternative for those who may not want to take out a loan, rent out rooms, or manage a sale-and-rent-back operation.

Common misconceptions and risks

While the benefits are clear, it’s important to understand the full picture:

• The property is no longer yours: Once sold, you can’t reverse the decision or reclaim full ownership.

• Your heirs may not receive the property: The bare ownership passes to the buyer once the usufruct ends.

• Accurate valuation is critical: If the usufruct or the property is not correctly valued, you may be paid less than the fair market value.

This is why professional support is essential. At Kalma, a team of legal, tax, and real estate experts will guide you through the entire process, ensuring that your rights are protected and your financial interests are prioritized.

Conclusion

Selling a property while keeping lifetime usufruct is an increasingly popular option for older adults seeking greater financial security without leaving their home. It’s legal, safe, and fiscally advantageous—especially when the property is your main residence and you’re over 65.

But as with any transaction involving real estate and taxes, planning and professional guidance are key. With the right strategy, this type of sale can significantly improve your quality of life and financial peace of mind—without tax surprises.

Ready to explore your options? Learn more in this full guide on how the sale of bare ownership while keeping usufruct is taxed under Spanish IRPF.

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City: Madrid
Country: Spain
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