How usufruct is valued for tax purposes: the rule of 89 minus age

What is the 89 minus age rule?

The valuation of a life usufruct does not depend on subjective assessments regarding the usufructuary's health or life expectancy. Law 29/1987 on Inheritance and Gift Tax, together with the Recast Text of the Property Transfer Tax Law, sets out a fixed formula applicable across the entire national territory.

The law stipulates that, to obtain the percentage of the property's total value represented by the life usufruct, the usufructuary's age must be subtracted from the fixed figure of 89. The reference age is the age of the usufructuary on the tax point date (for example, the date of the deceased's death in an inheritance or the date of execution of the public deed in a sale).

Maximum and minimum legal limits in life usufruct

The application of the 89 minus age usufruct calculation is not unlimited. The law itself imposes two caps that limit the resulting percentage at extreme ages:

• Maximum limit of 70%: The value of the life usufruct cannot exceed 70% of the property's total value. For this reason, for anyone aged 19 or under, the taxable value of the usufruct will automatically be 70%.
• Minimum limit of 10%: The life usufruct cannot be less than 10% of the property's total value. Therefore, for usufructuaries aged 79 or older, the applicable value will always remain at 10%, regardless of whether the mathematical subtraction yields a lower or negative result.

Once the percentage corresponding to the usufruct has been determined, the valuation of the bare ownership is derived as a residual: it is the remaining percentage needed to reach 100% of the property's value. In this way, bare ownership always fluctuates between a minimum value of 30% and a maximum value of 90%.

Examples of applying the 89 minus age usufruct calculation

To illustrate how the rule affects the tax value of a home, let us assume a property with an attributable tax value (according to the official Reference Value) of 200,000 euros.

Example 1: Usufructuary aged 65

Direct subtraction is applied: 89 minus 65 equals 24. As this percentage falls within the range of 10% to 70%, it is the final percentage.

• Value of life usufruct (24%): 48,000 euros.
• Value of bare ownership (76%): 152,000 euros.

Example 2: Usufructuary aged 83

Subtracting 83 from 89 would yield 6%. However, as this is below the legal minimum threshold, the 10% minimum limit comes into play.

• Value of life usufruct (10%): 20,000 euros.
• Value of bare ownership (90%): 180,000 euros.

Example 3: Usufructuary aged 16

The mathematical calculation yields 73% (89 minus 16). Exceeding the legal cap set by the regulation, the valuation is capped at the maximum permitted 70%.

• Value of life usufruct (70%): 140,000 euros.
• Value of bare ownership (30%): 60,000 euros.

Differences between life usufruct and term usufruct

It is important not to confuse the formula applicable to life usufruct with that of term usufruct. In term usufruct, the use and enjoyment of the property is granted for a specific number of years and expires at the end of that period, regardless of the usufructuary's lifespan.

For tax purposes, a term usufruct is valued at 2% of the property's total value for each year of agreed duration, subject to a maximum cap of 70%. Thus, a usufruct set up for a 5-year period is equivalent to 10% of the total property value, whereas one agreed for 35 years or more will reach the maximum valuation of 70%.

Complex situations: multiple usufructuaries

In estate planning operations or family acquisitions, it is common for usufruct to belong simultaneously or successively to several individuals, such as married couples. The governing regulations provide specific rules for these scenarios:

• Simultaneous usufruct: When usufruct is granted jointly to several holders, the total valuation of the usufruct is carried out taking into reference only the age of the youngest usufructuary, applying the 89 minus age usufruct calculation to the entire property. The resulting figure is distributed proportionally among the joint holders.
• Successive usufruct: When it is stipulated that the usufruct will pass from one holder to another upon death, the calculation is performed taking into account the age of each beneficiary on the date they effectively assume the right.

Taxation when transferring bare ownership and retaining usufruct

The precise valuation of usufruct determines the settlement of taxes associated with the sale of bare ownership:

Personal Income Tax (IRPF)

The owner selling bare ownership must calculate the capital gain or loss by reflecting the difference between the transfer value attributable to bare ownership and its adjusted acquisition value. It should be noted that vendors over 65 years of age enjoy full tax exemption under IRPF when the property transferred constitutes their primary residence.

Property Transfer Tax (ITP)

The buyer or acquirer of bare ownership must pay the regional ITP on the taxable base resulting from deducting the value assigned to the usufruct under the legal rule from the property's total value.

Municipal Capital Gains Tax (IIVTNU)

Tax on the Increase in Value of Urban Land becomes due upon transferring bare ownership. Its taxable base is calculated by applying the proportion corresponding to bare ownership to the cadastral value assigned exclusively to the land.

The significance of the Cadastral Reference Value

Since the entry into force of the Cadastral Reference Value issued by the Directorate General for Cadastre as the tax base for property transfer taxes, tax calculations regarding usufruct must use this official figure as their starting point.

Unless the value declared in the public deed is higher (in which case the latter will prevail), the percentage derived from subtracting the usufructuary's age from 89 will be applied to this Reference Value. Proper prior verification of this valuation avoids supplementary assessments from regional tax authorities.

Legal certainty and rigour in wealth structuring

The correct computation of real charges and taxes is essential to guarantee sound and legally transparent transactions. Complex property transactions require the involvement of accredited professionals in the legal and real estate sectors.

The involvement of entities with due administrative registration, such as inclusion in Banco de España's register of mortgage credit intermediaries (ICI code D-286), offers substantial guarantees in regulatory compliance. Likewise, professional recognition in the legal sphere, such as receiving accolades like the Sky Law European Legal Awards between 2023 and 2025, supports the proper application of rules relating to real rights and residential property taxation.

If you wish to analyse your personal situation or calculate the valuation corresponding to your home to monetise your assets while retaining life occupancy rights, you can request detailed information about our bare ownership sale service.