In Spain it is quite common that in the inheritance process, the titularity of the asset appears divided into ‘usufructo’, (being called the titular ‘usufructuario’) and ‘nuda propiedad’ (‘nudo propietario’, bare owner). The ‘usufructo’ is the right to use the asset, (usually for a lifetime) while the asset is the property of the ‘nudo propietario’ so upon the death of the usufructuario, the nudo propietario acquires or recovers all the rights over the asset.

Nuda propiedad and usufructo can originate with the inheritance by the will of the deceased, (also by the law of the succession in some cases) or may already have existed before the inheritance process, by way of gift to or purchase by the «nudo propietario». In the latter case, you should be aware of some special rules.

So if the usufructo is constituted mortis causa, by the last will of the deceased or by the law of the succession, the usufructuario and the nudo propietario must pay inheritance tax.

The usufructo is essentially a right which is limited in time,. When its validity is limited in time to a certain number of years, its value, for inheritance tax purposes, is 2% of the value of the asset for each year.

When it is valid for the lifetime of the usufructuario, its value depends on the age of the usufructuario at the time of constitution, 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). Less than 20 years is always 70 % of the value and more than 79 is always 10% of the value of the asset.

For a 50 year-old usufructuario, at the time of the acquisition of the usufructo (the date of the death of the deceased), the tax to be paid will be based on 39% of the asset’s value for the usufructuario and 61% for the nudo propietario.

Upon the death of the usufructuario the nudo propietario will pay over the 39% of the value of the asset that hadn’t been paid before, BUT over the value that the asset has at the time of usufructuario’s death ( and therefore the whole property is acquired by the «nudo propietario» or bare owner) and at the average rate at that moment.