Bare ownership: Meaning and Differences with Usufruct
The meaning of bare ownership in Spain and the difference between usufruct and bare ownership is sometimes difficult to understand. Many people also ask us about the relationship between bare ownership and inheritance.
Bare ownership is the property right that a person has over something, but who does not yet have the use and enjoyment of it until certain specific circumstances occur. Our Notaries in Barcelona have wanted to develop this concept so that it can be beneficial to you.
Bare ownership: meaning
How does bare ownership work? Currently, bare ownership of real estate is a concept frequently used by legal professionals. The legal meaning of bare ownership implies allowing owners to sell their property while continuing to live in it, also avoiding most taxes, so the right to enjoy the home is fully regulated. This is mainly designed for people with economic needs and of a certain age and need for care, or for those who have no heirs.
Regarding the types, there are, among others, lifetime usufruct and temporary usufruct.
In the first, the seller enjoys the property until their death. For the second, this right has a time limit agreed upon by the parties.
When does bare ownership end? How to transfer from bare ownership to full ownership?
It is important to know that the bare owner will always acquire the usufruct when the usufruct expires, and thus will go from being a bare owner to a full owner. That is, the death of the person who was the life usufructuary will cause the bare owner to also acquire the usufruct and have full ownership of the property. In the case of temporary usufructs, the procedure will be as agreed in the agreement.
Bare ownership and Usufruct: Differences
Naked ownership and its meaning can be confused with usufruct, although they are not the same. The former refers to the ownership of a property without the right to possess and enjoy it. On the other hand, the right of usufruct grants a third party the enjoyment of the real estate.
There are other important differences between naked ownership and usufruct. They are as follows:
- Usufruct allows the beneficiary to rent or sell the right, even to the naked owner themselves. However, the latter cannot rent out the property, although they can sell it to a third party.
- The main causes that extinguish usufruct can be death, the expiry of a term, or a resolutory condition (such as a marriage). The document must specify the cause before signing the purchase of the property.
Goods with bare ownership: examples
Those who acquire the bare ownership of a property have limited rights, but also obligations. For example, they can sell or mortgage the property, as well as carry out works, provided they do not harm or affect the rights of the usufructuary, since to affect the rights of the usufructuary they must give their consent.
Regarding obligations, the owner must bear the expenses inherent to their status, such as levies, certain taxes and improvements. An exception to this rule is the property tax (IBI), which is the responsibility of the usufructuary.
With bare ownership, who pays the community fees?
The usufructuary will also pay the community fees and the home insurance costs.
Flats with bare ownership
The owner who acquires a flat under this right will not be able to enjoy the dwelling, as we have explained. However, they will have to take care of the community expenses and some of the improvements that the property needs.
Houses with bare ownership
Just like flats, houses that need renovation to be improved are the responsibility of the owner. The law limits these renovations so that they do not decrease the value of the property.
Property with bare ownership
For the property, there are clauses where the end of the usufruct right is specified.
The bare ownership is an interesting right that allows the usufructuary to continue enjoying the asset. For people with financial problems, it can represent a significant source of income. It should not be confused with usufruct.
We hope this article has been helpful to you! If you want to continue learning about related matters, we recommend visiting our services on Wills and Inheritances or consulting our article on usufructs.
Other questions about what bare ownership means
To summarise, if I am the owner of a bare ownership, I will not be able to reside in it. If I pass away, my descendants will inherit the bare ownership, although not the usufructuary right that allows the use and enjoyment of it, therefore, the conditions are maintained for them until the death of the usufructuary.
People who need to obtain money to cope with day-to-day expenses, pay off a debt, or because they are elderly and need to pay for their residence may choose to establish a bare ownership of their home.
When an agreement is reached with the buyer, they must go to a notary to transfer the ownership of the property in a public deed of sale which will subsequently be registered in the Land Registry. Our Notaries for bare ownership in Barcelona can assist you with this process.
Who declares the bare ownership and how to include bare ownership in the income tax return are also frequent questions among those who buy bare ownership. And the fact is, as long as the usufruct exists, it should not be declared in the income tax return (IRPF). However, the cadastral reference and value of the property must be identified, specifying the right of bare ownership that belongs to them.
The bare ownership will only have to be declared when full ownership is held, as the acquisition of the usufruct is taxed as a capital gain.
As a consequence, it will be the usufructuary who must declare it, taking into account the exemptions that exist especially for those over 65 years old. The rental of the property and the type of usufruct decreed (temporary or lifetime) will also be factors.
Some people decide to donate the bare ownership, whereby they will retain the usufruct of the property while the recipient of the donation, usually their child, acquires the bare ownership. To process it, a public deed of donation in Barcelona must be signed.
In the case of couples under the community property regime, the bare ownership with a private character is not part of the marital estate, with the owner of the bare ownership having the exclusive right to it.
The bare ownership can be seized if the agreed bank payments are not made. If you wish to enjoy a usufruct, make sure that the agreed terms are established in the deed of sale so that it does not affect you, such as the full ownership being returned to you if the contract is breached.
We hope this article has been helpful to you! If you want to continue learning about related topics, we recommend visiting our services on Wills and Inheritances or consulting our article on usufructs.
JLA Notaries for the bare ownership procedure in Barcelona
Likewise, if you have any doubts or believe that bare ownership could benefit you, do not hesitate to get in touch with us! You have different means available, either by email, through the contact form on our website or by visiting us at our notary office in Barcelona. We will be delighted to assist you in solving your bare ownership issues in Barcelona!
