In this episode, An-Sofie and Glenn discuss a construction that for many years was the classic Belgian succession planning for real estate in Spain: the split purchase. Parents buy usufruct, children bare ownership. Smart? Sometimes. But new tax rules - both in Belgium and Spain - make this technique much less obvious today.
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We discuss clearly, practically and with concrete examples where it goes wrong, when it is still interesting and why there is a better alternative nowadays.
What will be covered?
1. What exactly is a split purchase?
- Explanation of usufruct vs bare ownership
- Legal implications: who gets to do what?
- Why parents become dependent on children's signatures
2. Tax consequences in Spain on purchase
- How Spain calculates the value of usufruct and bare ownership
- The impact of new construction vs resale
- Why some promoters do not allow split purchase
3. Belgian tax concerns
- The bank gift: to register or not?
- The suspect period of five years (and the risk of inheritance tax up to 27%)
- Differences between Flanders, Brussels and Wallonia
4. Who pays Spain's annual taxes?
- Overview of IBI, non-resident tax and basura
- Why bare owner actually pays nothing in Spain
5. What happens on the death of the usufructuaries?
- No inheritance tax... but a Spanish transfer tax on the updated value
- Sample calculation: how quickly that can add up
Why the classic split purchase is often not a good choice today
Glenn explains why the structure has lost its luster:
- Complexity in new construction
- The five-year risk in Belgium
- Spain's guaranteed death consolidation tax
For parents and children, this means there is a more efficient and fiscally secure solution.
The modern alternative: buy first, donate later
The strategy that almost completely displaces the old split purchase:
- Parents buy 100% of the property
- They then donate bare ownership to the children through a Spanish notary
- Parents keep usufruct
Advantages:
- No suspicious period in Belgium
- Spanish gift tax almost completely neutralised (99% reduction in many regions)
- No consolidation tax on death
- Maximum control for parents during their lifetime
Point of attention:
- Two notary fees and possible capital gains tax if you wait too long to donate
Also listen to our podcast episode on gifting in Spain.
When does the split purchase remain interesting?
For relationships beyond parents. children - such as uncles/aunts towards cousins/nieces - the split purchase may still be the best choice.
Conclusion
The split purchase was the norm for many years. Today, it no longer is.
Modern planning requires customisation, understanding of recent tax developments and correct assessment of risks.
Questions or suggestions?
Mail us at podcast@confianz.be - we will gladly address your question in a future episode.
