Real Estate Taxation: What Applies to Usufruct and Bare Ownership

With parental gifts showing a vertical increase, understanding how property rights are taxed is more critical than ever. The recent AADE circular sheds light on the details that determine the cost of transfers. 💡

How is the value of usufruct calculated?

The value of usufruct (epikarpia) directly depends on the age of the beneficiary. The younger the usufructuary, the higher the taxable value, as it is assumed they will enjoy the property for more years. For example, if the usufructuary is up to 20 years old, the value is set at 80% of full ownership, while for individuals over 80 years old, the percentage drops to 10%. In cases of a fixed term, the value is calculated in twentieths (1/20) for each year of duration.

When does a tax liability arise for bare ownership?

Bare ownership (psili kyriotita) is usually taxed at the time of its consolidation with the usufruct. The tax is calculated on the value of full ownership at that specific moment. However, the bare owner has the right to request immediate taxation through their own declaration to the Tax Administration. It is important to know that if bare ownership is transferred again (e.g., due to inheritance) before consolidation, no additional tax is due for that specific transfer. 💰

When is the consolidation of rights tax-free?

The consolidation of usufruct and bare ownership often occurs automatically (e.g., due to the death of the usufructuary) without a new charge, provided that the bare owner had already been taxed for their right during the initial acquisition. The same applies to fixed-term usufruct upon the expiration of the deadline. Conversely, if the original separation had resulted from a purchase, the consolidation may generate a new tax liability. 🏡