What is a sale with guaranteed rent?

A sale with guaranteed rent is a real estate transaction in which the property owner transfers ownership of their main residence to an investor or buyer, receiving the agreed amount in cash or through structured payments. Simultaneously, in the same notarised deed, a legal tenancy agreement is formalised, allowing the seller to remain in the property for life or for an agreed fixed term.

Unlike other options such as bare ownership (nuda propiedad) or life annuities, this model provides clear regulation under the framework of the Urban Tenancies Act (Ley de Arrendamientos Urbanos) and the Civil Code, establishing transparent terms regarding rent, duration, utility cover, and repairs.

Selling property during one's lifetime and inheritance: shifting from property to liquidity

By choosing to sell property during one's lifetime, the composition of the family estate undergoes a direct transformation. The property ceases to form part of the hereditary assets and is replaced by financial capital. This change has several legal and practical consequences for children and heirs:

• Replacement of the real estate asset with cash reserves: The heirs will not inherit the registered real estate property, but rather the remaining liquid funds in bank accounts or investments where the parents deposited the proceeds from the sale.
• Elimination of joint ownership and family disputes: One of the biggest difficulties when accepting an inheritance is dividing a property among siblings. By inheriting liquid capital instead of an indivisible asset, situations of joint ownership or co-ownership (proindiviso) are avoided, facilitating a precise and conflict-free division.
• Extinction of ongoing property costs: Children are freed from assuming future taxes linked to property ownership, extraordinary community levies, or ongoing property maintenance costs.

Tax impact on descendants and sellers

The tax dimension is decisive when assessing the impact of this transaction on both the owners and their heirs.

Tax treatment for parents

Property owners over the age of 65 enjoy full exemption from personal income tax (IRPF) on capital gains derived from the transfer of their main residence. This tax benefit makes it possible to preserve the full proceeds obtained without being subject to withholdings or regional taxation on the property's gain in value.

If the sold home was at any point designated as official protection housing (VPO) within the Comunidad de Madrid, compliance with statutory disqualification periods or maximum sales prices set by regional regulations in Madrid must be verified prior to formalising the transfer.

Tax treatment for heirs

When the property owners pass away, the children account for Inheritance and Gift Tax (ISD) according to the autonomous community of residence of the deceased. When inheriting liquid capital:

• The valuation of assets is straightforward and equals the bank balance on the date of death, unlike property, which requires the application of the Cadastral Reference Value and may lead to discrepancies with the tax authority.
• There is no obligation for heirs to settle municipal capital gains tax (Plusvalía Municipal or Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana), given that the property is no longer part of the estate.

What happens to the tenancy agreement when the owners pass away?

The tenancy agreement signed during the sale is linked to the sellers. Depending on whether a fixed term or a lifetime tenancy was agreed, the lease terminates upon the death of the last tenant owner.

At this stage, the heirs assume no obligation to maintain the lease nor remain exposed to debts with the landlord, provided rent obligations were met in the ordinary course. Security deposits provided at the time are settled in accordance with the law, and full possession of the property passes promptly to the buyer.

Protection of the forced share (legítima) and children's rights

Under the Spanish legal system, the forced share (legítima) constitutes the part of the estate that the testator cannot freely dispose of, as it is reserved by law for forced heirs. It is fundamental to understand that the decision to sell property during one's lifetime does not infringe upon forced share rights, since property owners hold full legal capacity to dispose of their assets for value during their lifetime.

When a sale is conducted at market value and financial consideration is registered, the equivalent value enters the owner's estate. Therefore, it is not considered a disguised gift or a fraudulent reduction of the estate, provided the transaction reflects genuine market conditions and is correctly formalised in a public deed.

Structuring the sale with legal guarantees

To guarantee peace of mind for both owners and their families, executing these types of contracts requires a thorough analysis of tenancy clauses, rent calculations, and the proper registration of guarantees in the Land Registry (Registro de la Propiedad).

At Sky Real Estate, we support families throughout the estate planning process. We benefit from the technical and legal backing of Sky Law, recognised at the European Legal Awards (2023-2025), ensuring maximum robustness in contract drafting. Furthermore, our activity complies with the standards required for financial and real estate intermediaries, being registered as a credit intermediary (ICI) under code D-286 with the Banco de España.

A proper initial valuation allows the ideal conditions to be established so that parents can enjoy the capital accumulated in their property without losing the security of their home, leaving their descendants a structured, transparent financial legacy free from real estate liabilities.

To find out in detail about the viability of your property and the operational terms, you can consult the specifications of our guaranteed rent sale service.