Any person who has acquired a home in bare ownership will no longer be able to appreciate personal income tax deductions when they sell it if they have not lived in it for at least three years as a full owner. This has been determined by the Supreme Court in a ruling issued at the end of 2022. But, what does bare ownership consist of?
To understand the ruling of the High Court, you must first understand the concept of bare ownership. When someone buys the bare ownership of a home, they are buying the right of ownership over it, but without being able to use and enjoy it because a third party (usually the person from whom it is purchased) owns its usufruct.
Thus, full ownership of the property is divided between two profiles: the usufructuary and the bare owner. The person who holds the ownership of the real right of usufruct of an immovable property is called usufructuary, while the owner of the property, during the duration of the usufruct, is called bare owner.
What are the benefits of acquiring a bare property?
Bare ownership allows people over the age of 65 who own a home to sell precisely the property of that home to obtain liquidity, but without having to leave it, that is, they can live in it until they die.
Regarding the buyer, Simone Colombelli, director of Mortgages of the mortgage comparator iAhorro, assures that “normally the prices of this type of housing can be lowered between 30% and 50% on the market price”, so ” You can find houses with very cheap prices, depending on the age of the person who sells it (the higher the life expectancy, the lower the sale price), the state of the house and its location, among other things”. Regarding the buying and selling process of any type of housing, Colombelli qualifies, “it is the same as for the buying and selling of any other type of housing.”
What changes in the IRPF deduction of bare ownership?
Citizens are exempt from taxing the capital gain from the sale of a habitual residence in personal income tax. However, now, in the event that that home has been acquired as bare ownership and despite the fact that the usufructuary has already died, the Supreme Court has ruled that, in order to be able to deduct personal income tax, the owner must have been a “full owner” for at least three years of that home, in addition to being your habitual residence all that time.
The High Court considers that the habitual residence is one in which the owner lives for at least three years in a row or one that had the character of habitual residence, but, despite not having elapsed three years until its sale, there are certain circumstances that oblige the change of home, as they can, says the director of iAhorro Mortgages, “the celebration of a marriage, a divorce, a transfer of address due to a change of work, among other things.”
In addition to being considered as his habitual residence, in order to be able to sell it, the owner must also have its usufruct, which would result in possession of full ownership of the house and which is regulated by article 348 of the Civil Code.
