The free constitution of the usufruct of real estate in a family context

Abstract

The purpose of this paper is to analyse whether, with the objective of avoiding the progressivity of the Personal Income Tax (IRPF)  and reducing Revista Técnica Tributaria / Nº 146 / Julio - Septiembre 2024 159 the total family tax burden, it is economically advisable  for a taxpayer who earns a large amount of income to constitute in favor of his child a temporary free usufruct of real  estate.

From the tax perspective, the family situation must be taken into consideration in order to assess whether this operation is advisable  or not. In particular, the possible loss of the tax deduction for descendants should be evaluated, as well as whether the  property will be transferred in the future.

Additionally, besides comparing the constitution of this real right with the donation of the property of the real estate, it is necessary to study the impact of the different tax figures, both on the donating ascendant and the receiving descendant, at the moment of the  constitution of the temporary usufruct and its extinction, moment in which the full ownership is consolidated, returning to the initial  situation.