Investing in Bare Ownership: A Smart Real Estate Opportunity

Investing in bare ownership has established itself as one of the most intelligent real estate strategies for those seeking to acquire properties at significant discounts. In a market where prices continue to climb, this formula allows investors to buy homes at 30–50% below market value. Here’s everything you need to know about why and how to invest in bare ownership in Spain.

Why Is Bare Ownership a Good Investment?

Bare ownership investment offers advantages that are difficult to find in other real estate options:

1. Significant Discount on Market Price

When you buy the bare ownership, you acquire a property without the right of immediate use, which translates into a discount that varies based on the usufructuary’s age:

Usufructuary’s Age	Approximate Discount	Price Paid (€300,000 property)
65 years	40–50%	€150,000 – €180,000
70 years	35–45%	€165,000 – €195,000
75 years	25–40%	€180,000 – €225,000
80 years	20–35%	€195,000 – €240,000
85+ years	15–25%	€225,000 – €255,000

To understand how these values are calculated, see our article on how to calculate bare ownership value.

2. Double Appreciation Effect

The investment benefits from a dual appreciation mechanism:

• Property value appreciation: the real estate market tends to rise over the long term.
• Temporal convergence: as time passes, the bare ownership value approaches the full ownership value as the usufruct diminishes.

Practical Example:

• You purchase bare ownership for €180,000 (property worth €300,000)
• In 10 years, the property is valued at €360,000 (2% annual appreciation)
• You consolidate full ownership: your €180,000 investment is now worth €360,000
• Total return: 100% (before transaction costs)

This dual effect makes bare ownership one of the few real estate investments with a built-in appreciation mechanism beyond simple market growth.

3. Zero Management Costs During the Usufruct

During the usufruct period, you have no running costs:

• The usufructuary pays property tax (IBI)
• The usufructuary covers community of owners fees
• The usufructuary handles all utility bills
• The usufructuary maintains the property in good condition

As the bare owner, you are only responsible for extraordinary repairs (structural, roof), which are infrequent.

4. Ethical and Socially Responsible Investment

Unlike conventional real estate investment, bare ownership has a positive social impact:

• You help elderly homeowners access liquidity while staying in their homes
• You contribute to a more just housing model where both parties benefit
• There is no displacement — the original occupant stays in their home
• The transaction is fully voluntary and supervised by a notary

How to Invest in Bare Ownership: Step by Step

Step 1: Define Your Investment Strategy

Before investing, consider the following factors:

• Time horizon: bare ownership is a long-term investment (typically 5–20 years). Are you comfortable waiting?
• Investment amount: prices range from €50,000 to €500,000+ depending on location and property type
• Target location: prime areas (Madrid, Barcelona, coastal regions) offer the best long-term appreciation
• Expected return: the younger the usufructuary, the larger the discount but the longer the wait

Step 2: Find the Right Property

Look for properties that meet these criteria:

• Good location: areas with strong demand and growth potential
• Usufructuary age 70+: offers a balance between discount and reasonable time horizon
• Solid construction: minimises the risk of expensive extraordinary repairs
• Clear legal status: no liens, mortgages, or legal disputes

At NudaPropiedad, we offer a curated selection of verified properties with full legal due diligence completed.

Step 3: Due Diligence

Essential checks before purchasing:

1. Land Registry verification: confirm the property’s legal status, any charges or encumbrances
2. Property valuation: obtain an independent appraisal to verify the asking price is fair
3. Usufructuary information: understand the terms of the usufruct (lifelong, fixed term, conditions)
4. Tax implications: calculate the Transfer Tax (ITP) and other costs — see our tax guide
5. Legal review: have a specialised lawyer review the contract before signing

Step 4: Formalisation

The purchase is completed before a notary public:

• Deed of sale: transferring the bare ownership
• Registration of usufruct: the seller’s life usufruct is formally registered
• Land Registry recording: both rights are inscribed for maximum legal protection

Step 5: Wait and Monitor

After purchase, your responsibilities are minimal:

• Monitor that the usufructuary is maintaining the property
• Pay only for extraordinary repairs if needed
• Keep your paperwork and insurance up to date
• Wait for the usufruct to end — at which point you gain full ownership automatically

Expected Returns: Real Numbers

Let’s look at realistic return scenarios:

Conservative Scenario

Factor	Value
Property market value	€250,000
Purchase price (bare ownership)	€140,000
Usufructuary age	72 years
Expected consolidation	~12 years
Annual property appreciation	1.5%
Property value at consolidation	€299,000
Total return	113%
Annualised return	6.4%

Optimistic Scenario

Factor	Value
Property market value	€350,000
Purchase price (bare ownership)	€180,000
Usufructuary age	78 years
Expected consolidation	~7 years
Annual property appreciation	2.5%
Property value at consolidation	€416,000
Total return	131%
Annualised return	12.7%

These returns are significantly higher than most traditional real estate investments, with the added benefit of no management overhead during the investment period.

Tax Advantages for Investors

Bare ownership offers several tax benefits:

Transfer Tax (ITP) Savings

You pay ITP on the bare ownership value, not the full property value. For a €300,000 property with a 75-year-old usufructuary:

• Full property ITP (at 6%): €18,000
• Bare ownership ITP (at 6% on 86%): €15,480
• Savings: €2,520

Capital Gains Tax Deferral

You don’t realise any capital gains until you sell the property after consolidation, effectively deferring the tax liability for years.

Wealth Tax Considerations

The property is declared at its bare ownership value — not its full market value — potentially reducing your wealth tax liability.

Risks to Consider

Every investment carries risks. Here are the main ones for bare ownership:

Longevity Risk

The usufruct is typically lifelong, meaning the consolidation timeline is uncertain. The usufructuary may live longer than actuarial tables predict. Mitigation: focus on usufructuaries aged 70+.

Property Deterioration

The usufructuary is legally obligated to maintain the property, but enforcement can be difficult. Mitigation: include maintenance clauses in the deed and conduct periodic inspections.

Market Risk

Like any real estate investment, property values can decline. Mitigation: invest in high-demand areas with strong fundamentals.

Liquidity Risk

Bare ownership is less liquid than standard real estate. Finding a secondary buyer may take time. Mitigation: only invest capital you won’t need in the short term.

Regulatory Risk

Tax laws and regulations may change over time. Mitigation: stay informed and consult with a tax advisor regularly.

Bare Ownership vs Other Real Estate Investments

Feature	Bare Ownership	Buy-to-Let	REITs	Property Funds
Entry price	30–50% discount	Full price	Variable	Variable
Management effort	None	High	None	None
Expected return	6–13% annualised	3–8%	4–8%	3–7%
Liquidity	Low	Medium	High	Medium
Social impact	Positive	Neutral	Neutral	Neutral
Tax efficiency	High	Medium	Medium	Medium

Who Should Invest in Bare Ownership?

Ideal Investor Profile

• Patient investors with a 5–20 year horizon
• Socially conscious investors who value ethical returns
• Portfolio diversifiers seeking alternatives to stocks and bonds
• High-net-worth individuals looking for tax-efficient real estate exposure
• Retirees seeking stable, low-maintenance property investments

Who Should NOT Invest

• Those needing immediate rental income
• Investors requiring high liquidity
• Those with a short-term investment horizon (under 5 years)
• Anyone uncomfortable with uncertainty about the consolidation date

Getting Started

Ready to explore bare ownership investment? Here’s what to do:

1. Browse our properties: check our available bare ownership properties across Spain
2. Learn more: read about how bare ownership works in detail
3. Get expert advice: contact us for a free, personalised consultation
4. Understand the taxes: review our comprehensive tax guide

At NudaPropiedad, we guide investors through every step — from property selection to legal completion. All our properties are thoroughly vetted, with full legal documentation and transparent pricing.