Taxation in Madrid

2026-08-10

Bare Ownership and Usufruct in Madrid: What They Are and How They Affect a Property Sale

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Bare ownership and usufruct are two concepts that are becoming increasingly common in the Spanish property market, particularly in wealth-planning transactions, inheritances and property sales involving older owners. Although these terms may initially appear complex, understanding them is essential if you are considering buying an apartment in Madrid, selling a family home or investing in a property with a legal structure different from a conventional purchase.

In the market for luxury properties in Madrid, these transactions may involve exceptionally well-located homes in areas such as Salamanca, Chamberí, Retiro, Chamartín or Centro.

Before proceeding, however, it is essential to understand exactly what is being purchased, which rights are acquired and what limitations apply.

What is bare ownership?

Bare ownership is legal ownership of a property without the immediate right to use and enjoy it. In other words, the bare owner owns the property but cannot live in it or rent it out while a valid usufruct exists in favour of another person.

Put simply, you purchase the property, but another person retains the right to use it for an agreed period or for the rest of their life in the case of a lifetime usufruct.

What is usufruct?

Usufruct is the right to use and enjoy an asset that belongs to another person. In the case of a residential property, the usufructuary may live in it or, depending on the circumstances and the agreed conditions, receive rental income from it.

A bare ownership transaction therefore involves two parties:

The bare owner, who holds legal ownership of the property.
The usufructuary, who retains the right to use and enjoy the property.

This separation between ownership and use is the key to understanding the entire transaction.

The difference between buying a conventional property and buying bare ownership

When you purchase a property conventionally, you acquire both ownership and the right to use it. You can move into it, rent it out, renovate it or sell it, subject to the applicable regulations.

When you purchase bare ownership, you acquire legal ownership of the property but cannot enjoy full control over it until the usufruct ends.

For this reason, these transactions are generally completed at a price below the market value of a property that is free from rights of use.

The advantage for the buyer is the opportunity to acquire an asset at a discount. The limitation is that the property cannot be enjoyed immediately.

Why would someone sell the bare ownership of a property?

The most common scenario involves an older person who wishes to obtain liquidity without leaving their home. They sell the bare ownership, receive payment for the transaction and retain a lifetime usufruct that allows them to continue living in the property.

For the seller, this can be a useful wealth-planning solution if they wish to improve their quality of life, supplement their income or reorganise their assets without moving home.

For the buyer, it can represent a medium- or long-term investment, provided that the timeframe, real value of the asset and associated obligations are properly understood.

Is buying bare ownership in Madrid a good investment?

It can be, but it is not suitable for every investor. Buying bare ownership in Madrid may make sense if you are seeking a long-term wealth investment and do not need to occupy or rent out the property immediately.

The main attraction is the opportunity to acquire a well-located property below its full market value. In prime areas, where supply is limited, this structure can provide access to assets that would otherwise command a considerably higher price.

However, the investment outcome depends on several factors:

The location of the property.
The age of the usufructuary.
The market value of the property with full ownership.
The discount applied.
The condition of the building.
Associated costs.
The estimated period until full ownership is consolidated.

It should not be assessed in the same way as a conventional property purchase. It follows a different investment logic.

What happens when the usufruct ends?

When the usufruct comes to an end, the bare owner consolidates full ownership of the property. At that point, they hold both legal ownership and the right to use and enjoy the property.

From then on, the owner may live in the property, rent it out, sell it or renovate it according to their objectives.

This is the point at which the investment becomes a fully available property.

Lifetime usufruct and temporary usufruct

Usufruct can be for life or temporary.

A lifetime usufruct remains in force until the death of the usufructuary. It is the most common structure when an older person sells the bare ownership of their home while retaining the right to continue living there.

A temporary usufruct is granted for a fixed period, such as 5, 10 or 15 years. In this case, the buyer knows from the outset when they will obtain full use of the property.

For you as a buyer, this distinction is essential. The duration of the usufruct directly affects the price, the risk and the investment strategy.

Which expenses does each party pay?

One of the most important points is to establish clearly which party is responsible for each expense.

In general terms, the usufructuary usually pays the ordinary costs associated with using the property, while the bare owner may be responsible for extraordinary or structural expenses. However, each case should be reviewed individually and properly documented.

Before signing, it is advisable to clarify responsibility for:

Ordinary community fees.
IBI property tax.
Insurance.
Ordinary repairs.
Special community assessments.
Structural works.
Utilities.
Notary and tax costs related to the transaction.

Clear drafting helps prevent future disputes.

What to check before buying bare ownership

Before purchasing, you should carry out comprehensive due diligence. An attractive price alone is not enough.

Always review:

The Land Registry extract.
Legal ownership and the existence of the usufruct.
The age and number of usufructuaries.
The market value of the property with full ownership.
The condition of the building.
The building inspection report (ITE).
Potential special community assessments.
The position recorded with the Cadastre and Land Registry.
Community fees.
The condition of the property.
Rules concerning works, use and maintenance.

For luxury apartments in Madrid, it is also essential to assess the micro-location, floor level, natural light, orientation, parking, storage room and quality of the building.

Attractive areas for this type of investment in Madrid

Bare ownership can be particularly attractive in established areas where the long-term value of the asset is supported by location and scarcity.

Salamanca district

The Salamanca district stands out for its liquidity, international demand and prestigious buildings. In a long-term wealth strategy, the quality of the location can be one of the main advantages of a bare ownership investment.

Chamberí

Chamberí, particularly Almagro, Trafalgar and Ríos Rosas, combines an elegant residential profile with proximity to Castellana and a strong concentration of classical buildings.

Retiro and Jerónimos

Retiro and Jerónimos offer significant cultural and heritage value, a privileged setting close to Retiro Park and an especially limited residential supply.

Chamartín

Chamartín, particularly El Viso, Nueva España and Hispanoamérica, stands out for its strong family demand, excellent connections and larger residential properties.

Justicia and Salesas

Justicia and Salesas combine a cosmopolitan lifestyle, prestigious architecture and strong appeal among international buyers.

In all these areas, the precise location remains crucial. You are not simply investing in a neighbourhood, but in a particular street, building and property.

Advantages for the buyer

Buying bare ownership can offer several advantages:

Access to a property at a discount.
Investment in prime areas with a lower initial outlay.
Potential for long-term capital appreciation.
The opportunity to diversify wealth.
Acquisition of a tangible real estate asset.

This structure is particularly suited to patient investors who do not require immediate rental income.

Risks to consider

Bare ownership also involves risks. The main one is the lack of immediate availability. You may own the property legally but will not be able to use it until the usufruct has ended.

You should also consider potential future expenses, uncertainty regarding the duration of a lifetime usufruct, the condition of the property and restrictions on renovation while the right of use remains in force.

For this reason, the key is to purchase at a sufficient discount, with clear documentation and specialist advice.

Who is this type of transaction suitable for?

Buying bare ownership may be suitable for you if:

You are seeking a long-term investment.
You do not need to occupy the property immediately.
You want to access a prime area at a lower entry price.
You wish to diversify your real estate assets.
You are comfortable with a more complex legal structure than a conventional purchase.

It may not be the best option if you require immediate returns, rapid liquidity or direct use of the property.

Advice before signing

Before proceeding, compare the price with similar properties that are available with full ownership. Assess whether the discount compensates for the waiting period and carefully review all charges, expenses and obligations.

Make sure that the transaction is properly reflected in the notarial deed and registered with the Land Registry.

Above all, do not make the decision based solely on price. In Madrid, a poor-quality building or secondary location can reduce the attractiveness of an investment even when a significant discount is offered.

Bare ownership in the luxury property market

Within the Madrid luxury real estate segment, bare ownership can offer an interesting route to acquiring unique assets in prime locations.

However, it requires a wealth-preservation approach rather than a speculative one.

The objective should be to acquire a high-quality, well-located property with lasting underlying value, rather than simply buying cheaply.

In luxury real estate, the quality of the asset always matters more than the legal structure used to acquire it.

Buy your new residence

How BARNES Madrid can assist you

At BARNES Madrid, we assist clients with complex real estate transactions through a discreet, rigorous and wealth-focused approach.

We analyse the location, building, market value, documentation, Cadastre, Land Registry, usufruct, charges, expenses and potential for capital appreciation.

If you are looking to invest in luxury properties in Madrid, purchase bare ownership, sell a property subject to usufruct or explore on & off-market opportunities in Salamanca, Chamberí, Chamartín, Retiro, Justicia or Jerónimos, our team can assist you throughout the entire process.

Visit us at 15 Velázquez Street, in the heart of the Salamanca district. BARNES Madrid.