Usufruct and bare ownership: who really owns the house?

What is the right of usufruct?
Usufruct is the right to use and enjoy property belonging to another person, without altering its form or substance. This is how the Civil Code defines this legal concept.
In the case of real estate, it means that the usufructuary can, as a rule, live in it, use it, or derive benefits from it, respecting the economic purpose of the property. In other words, whoever has the usufruct of a house can live in it and, within the applicable rules, rent it out and receive the rent.

What is bare ownership?
Bare ownership is, simply put, the ownership of the house without the right to use and enjoy it while the usufruct exists. This is why whoever has bare ownership is often called the bare owner or root owner.

Returning to the initial example: the mother can continue living in the house because she has the usufruct, while the son becomes the bare owner. The son is, therefore, the owner of the property, but cannot simply arrive at the house and decide to occupy it or expel the mother while the usufruct is in effect.
When the usufruct ends, the bare ownership and the usufruct cease to be separate, and the property is once again reunited in one person.

Can I sell only the bare ownership?
It is possible to sell only the bare ownership and retain the usufruct of a property.
For example, a person owns a house. You need liquidity, but you don't want to move. You sell the bare ownership for a certain amount, receive the money now, and retain the usufruct, continuing to live in the property as always.

The buyer becomes the holder of the bare ownership, but, while the usufruct lasts, cannot occupy the house or dispose of it as a full owner would.
So, who is the real owner?
The simplest answer is: the usufructuary and the bare owner have rights over the same house, but different rights.
The usufructuary has the right to use and enjoy the property. The bare owner retains ownership, but is temporarily limited in the exercise of the use and enjoyment of the property.
It is precisely this division of rights that allows, for example, someone to transfer the bare ownership of a house to a child or sell it to third parties without losing the right to continue living in it.

How long can the usufruct last?
The usufruct can be established for a specific period or be for life.
When it is established in favor of a natural person, it cannot exceed the life of the usufructuary. If it is established in favor of a legal entity, the maximum duration is 30 years.
Thus, if the mother transfers the bare ownership of the house to her son and reserves a life usufruct for herself, this ends with her death.
The Civil Code also provides for other causes of extinction of the usufruct, including the end of the term when established.

Who pays for expenses and works?
Here begins one of the most important questions and one that most easily generates conflicts between the usufructuary and the bare owner.
As a rule, the administration expenses and ordinary repairs indispensable to the conservation of the property are the responsibility of the usufructuary.
Extraordinary repairs, however, follow different rules and, in principle, are not automatically the responsibility of the usufructuary. The Civil Code distinguishes these types of repairs. The bare owner must carry out the works after notifying the usufructuary, but if the latter does not, the usufructuary may carry them out at their own expense and demand reimbursement at the end of the usufruct.
Therefore, with regard to works, the nature of the intervention and the specific circumstances may make a difference.

And who pays the condominium fees?
When we are dealing with a fraction in a building under horizontal property ownership, the question may also arise.
Jurisprudence has understood that, in certain situations, ordinary condominium expenses related to the administration and maintenance of the unit are the responsibility of the usufructuary, precisely because they are linked to the use and enjoyment of the property.

Can the usufructuary rent the house?
In principle, yes. The right of usufruct allows its holder to use, enjoy and manage the property respecting its economic purpose. The Civil Code expressly provides that the usufructuary may transfer their right to another person, permanently or temporarily, except for restrictions provided by law or in the constitutive title.
In practice, this means that the usufructuary can have a much more active role over the property than simply living in it.
But there is a fundamental difference: you cannot treat the house as if it were your full property and do whatever you want. Usufruct has limits and must preserve the substance and economic purpose of the property.
However, if the usufructuary dies, the lease expires, not binding the new full owner, unless exceptional rules protecting the lessee apply.

Can the bare owner sell the house?
Yes, you can transfer your bare ownership, but you cannot sell what you do not own: the usufruct.
That is, if a person is the bare owner of a house over which another person has usufruct, they can transfer the bare ownership to a third party. The usufruct, however, remains under the terms in which it was established.
Whoever buys will own the bare ownership, but will have to respect the existing usufruct.

Who pays the taxes?
The existence of usufruct and bare ownership also has tax consequences, but it is important to distinguish IMT (Municipal Tax on Transfers) from IMI (Municipal Property Tax).

IMT is related to an onerous transfer of a property or one of the partial figures of the right of ownership. Therefore, there may be ITBI when acquiring, for example, the bare ownership or the usufruct of a property through payment. The law establishes its own rules for determining the taxable value in these situations.
Property Tax (IPTU) is an annual tax, and when there is usufruct, it is the usufructuary who pays the IPTU, not the holder of the bare ownership. The IPTU Code expressly states that, in cases of usufruct, the tax is due by the usufructuary.
This means that, in a situation where one person maintains the usufruct of a house and another retains the bare ownership, the usufructuary remains responsible for the IPTU as long as the usufruct exists.
The same principle applies to AIMI (Additional Property Tax), when it is due: for the purposes of this tax, the usufructuary is considered the liable party in relation to the property.

A simple example
Returning to the example of a mother who donates the bare ownership of the house to her son, but reserves the usufruct for herself for life:
IPTU: is due by the mother, as usufructuary.

IMT (Property Transfer Tax): only comes into play if there is a transaction subject to this tax, namely an onerous acquisition of one of these legal positions.
It is also important to understand that the separation between ownership and usufruct has tax consequences.
The IMT Code establishes specific rules for situations in which ownership is transferred separately from the usufruct. In this case, the tax is calculated on the value of the bare ownership; when the usufruct is established, the tax is calculated on its current value.
The taxable value attributed to the bare ownership depends, among other factors, on the age of the usufructuary when the usufruct is for life. The younger the person whose life depends on the usufruct, the higher the percentage attributed to the usufruct and the lower the corresponding percentage for the bare ownership, according to the ITBI (Property Transfer Tax) Code table.

This means that the bare ownership is not simply considered to be worth half or a certain fixed percentage of the property. The tax assessment follows its own rules.

And what happens when the usufructuary dies?

If the usufruct is for life, it ends with the death of the usufructuary. The property then ceases to be divided between usufruct and bare ownership.
The bare owner then has full ownership of the property.
It does not mean, therefore, that the heirs of the usufructuary will inherit the right to continue living in that house. The usufruct for life is linked to the life of the usufructuary and is extinguished with his death.

Why resort to usufruct?
It is a solution that can be used in different situations.
One of the best known is the transmission of assets within the family. For example, someone may want to anticipate the transfer of a house to their children, but retain the right to use it during their lifetime.
It can also arise in sharing, inheritances or certain purchase and sale operations, when immediate liquidity is desired.
For those who transfer the bare ownership, the great advantage is being able to maintain the right to enjoy the property. For the person who receives the bare ownership, the advantage is becoming the owner of the property, knowing that when the usufruct ends, they will have full ownership.
Usufruct and bare ownership do not mean that there are two owners of the same house. They mean that the rights to the property have been divided.
One person retains the right to use and enjoy the property; another retains ownership, but temporarily without this right of use and enjoyment.
That is precisely why a house can simultaneously belong to a child and continue to be the house where the parents live. And it can also be a way to transform part of the value of a house into liquidity, without obliging the seller to stop living in it: the bare ownership is sold, the usufruct is maintained.