Gift with usufruct is a legal arrangement where you gift away the bare ownership of your Spanish home (usually to children), but retain the lifetime right of use. This allows you to stay in the property or receive rental income. On the donor's death, the bare ownership automatically grows to full ownership with the beneficiary, often without new inheritance tax in Belgium.
Expert Insight: "Many owners forget that a gift in Spain has tax consequences for both parties. It is not a 'free' transaction. A thorough cost-benefit analysis between gifting and inheriting is essential, as gift taxes can be higher than inheritance taxes in certain Spanish regions."
What exactly does a gift with reservation of usufruct entail?
In this transaction, you split the ownership of the property into two parts:
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Bare ownership (Nuda Propiedad): This is transferred to the donee (your children). They will own it, but will not be allowed to use or rent the property as long as you are alive.
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Usufruct (Usufructo): This retains you as the donor. You retain control, enjoyment and any income from the property.
The crucial advantage of this structure is the consolidation. When the usufructuary dies, the usufruct extinguishes and the bare owner becomes full owner by operation of law.
What taxes do you pay in Spain?
Contrary to popular belief, a gift in Spain is rarely tax-free. The Spanish tax authorities tax both the giver and the recipient.
1. Taxes for the Donor (U)
You may be gifting away, but for tax purposes this is considered a disposal in Spain. You owe:
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Capital gains tax (Ganancia Patrimonial): You pay Spanish income tax (IRPF) on the difference between the purchase value and the current gift value of the part you are donating away (the bare property). If the property has increased in value since the purchase, this amount can go from 19% to 26% on the gain.
2. Taxes for the Donee (The Children)
The recipient of bare property pays two specific taxes:
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Gift tax (Impuesto de Donaciones): Fares vary by Autonomous Region (e.g. Andalusia vs Valencia).
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Plusvalía Municipal: A municipal tax on land appreciation.
Note: Unlike a split purchase (where you split immediately on purchase), you pay on donation no transfer tax (ITP) at the time of the deed, but gift tax.
The 'Forgotten' Tax: Consolidation
When the usufruct expires (on the death of the donor), the bare owner in Spain often has to pay another consolidation tax pay. This is usually a percentage transfer tax on the value of the usufruct as calculated at the time of the original gift. This tax depends on how the usufruct was obtained at the time.
Is tax due in Belgium?
No, in most cases you avoid Belgian tax.
As long as the gift deed is pasted before a Spanish notary and you do not have it registered in Belgium, the donors will not pay Belgian gift tax.
The strategic advantage is clear:
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You avoid inheritance tax in Belgium on the Spanish property (since usufruct extinguishes and does not inherit).
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You avoid gift tax in Belgium (if unregistered).
This makes the construction a powerful wealth planning tool, as long as the Spanish tax cost outweighs the savings in Belgium.
Case study: flat in Torrevieja
To make the theory concrete, let's take a realistic scenario of a married couple with a flat in Torrevieja.
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Value full property: € 200.000
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Action: Parents donate bare ownership to their two children and retain usufruct.
Who pays for what?
| Party | Load type | Notes |
| Parents (Donors) | Value-added tax (IRPF) | Tax on the notional profit on the 'bare ownership' part. If the property increased in value since purchase, they will receive an assessment in their Spanish tax return. |
| Children (Beneficiaries) | Gift tax | Payable on bare property value. Rate dependent on Valencia region. |
| Children (Beneficiaries) | Plusvalía Municipal | Municipal tax to Torrevieja on land value. |
| Effect on death | No inheritance tax | The flat falls out of the estate. No inheritance tax in Spain or Belgium on this property. |
Decision: Donate or Inherit?
Gifting with reservation of usufruct is an effective way to avoid the high Belgian inheritance tax, but requires an initial investment in Spanish taxes.
Is it always the best choice? No. In some Spanish regions, the exemptions for inheritances (on death) are so wide that inheriting can be cheaper than donating. Indeed, when donating, you have to settle immediately (capital gains and gift tax), while inheriting in direct line is sometimes virtually tax-free in Spain.
Opinion: Always have a comparative calculation made between "donate now" and "inherit later" for your specific region and family situation.
Read more about inheritance tax in Spain and Belgium.
Frequently asked questions (FAQ)
Is a gift in Spain cheaper than inheriting?
Not always. Although you avoid Belgian inheritance tax, a gift in Spain immediately triggers gift tax and capital gains tax. This is to be considered on a case-by-case basis.
What happens to the usufruct if I die?
On death, usufruct 'extinguishes'. It automatically joins the bare ownership, making your children full owners. In Spain, this does require an administrative act (consolidation) and a specific tax to be paid on the value of the extinguished usufruct.
Do I need to go to the notary in Spain for a donation?
Yes. A notarial deed in Spain (Escritura de Donación) is required for the donation of Spanish property. A private deed is not valid. This is also when taxes are calculated.
Can I still sell the property after the gift?
Not independent. After the gift of bare ownership, you need the consent of the bare owners (your children) to sell the property in full ownership. The proceeds are then divided according to the value of the usufruct and bare ownership at that time.
About the author: Glenn Janssens is a lawyer specialising in Spanish real estate transactions and tax regulations. Since 2017, he has been helping Belgian and Dutch individuals and entrepreneurs to safely purchase and structure real estate in Spain. He guides files from A to Z: from due diligence, ownership and tax control to estate planning and optimisation for residents and non-residents. Thanks to his years of experience, hundreds of handled files and focus on transparent communication, Glenn makes complex Spanish legislation understandable and practically applicable for every property buyer.
