Selling the usufruct of a property in Peru

When a property in Lima or Arequipa goes through succession and the surviving spouse keeps the right to use it for life, what they technically receive is a usufruct. Decades later, the children —now bare owners— often face the same question: can the usufructuary sell that right to a third party, or is it better to wait for consolidation? Peruvian law allows both routes; this article grounds the theory with numbers and procedures.

Usufruct in the Peruvian Civil Code

Articles 999 to 1025 of the Civil Code govern usufruct as a temporary real right. The basic rules are:

• It applies to property belonging to someone else and allows the holder to use and enjoy it.
• It has a maximum term of 30 years when granted to natural persons, or for life if so agreed and the law allows.
• The usufructuary must preserve the substance of the property and return it at the end of the right.
• It is transferable and attachable, unless expressly forbidden in the constitutive title.

This transferability is the legal basis for selling it.

What is actually sold?

The buyer acquires the right to occupy or rent out the property for the time remaining to the original usufructuary. It is important to note:

• If the usufruct is for life, the right ends with the death of the constituent usufructuary, not the buyer's. That is why institutional buyers almost never accept these usufructs.
• If it is for a fixed term, the buyer enjoys the property until that date and then it reverts to the bare owner.
• The bare owner may have reserved a preemption right in the constitutive deed.

The most common operation is the joint sale: usufructuary and bare owner sign at the same time, the buyer receives full ownership and each seller collects their percentage.

How to value the right

Unlike other countries, Peru does not set a legal table for usufructs. Notarial and REPEV appraisal practice combines two approaches:

Discounted rental cash flow

The market monthly rent is estimated, projected over the usufructuary's life expectancy (INEI tables) or over the remaining term, and discounted at a rate of 5–7 %. For an apartment in Miraflores that rents for S/ 4,500 a month and a 68-year-old usufructuary, the present value of the usufruct usually lies between 30 % and 45 % of the property's value.

Notarial rule of thumb

Some firms use, as a reference for family agreements:

| Term / age | Percentage of property value | | --------------------------- | ---------------------------- | | Usufructuary under 50, life | 50–60 % | | 50–70 years | 30–45 % | | Over 70 years | 15–25 % | | Fixed term | 2 % per year, max 50 % |

For SUNARP and SUNAT, however, the only thing that counts is an expert report signed by an appraiser registered with REPEV.

Process step by step

1. Appraisal of the property and opinion on the value of the usufruct.
2. Search and lien certificate at SUNARP (CRI).
3. Communication to the bare owner and verification of any preemption right.
4. Minute and public deed before notary, signed by the usufructuary, the buyer and, if involved, the bare owner.
5. Payment of the Alcabala tax on the value of the usufruct, not on the property's value (3 % over the excess of 10 UIT).
6. Property tax current and no-debt certificate.
7. Registry entry at SUNARP.

Income tax for the seller

The gain obtained by the usufructuary is treated as second-category income and is taxed at an effective rate of 5 % on the gain (Article 84-A LIR). The deductible cost is the value of the usufruct declared in the succession, with the applicable accounting adjustments. The single-home exemption of Article 2 of the LIR rarely applies to usufruct, because the usufructuary is not strictly an owner; it is best to confirm with an accountant before signing.

Practical recommendation

If the family's goal is liquidity, it is almost always better to sell full ownership and split the price between usufructuary and bare owner according to the agreed percentages. The market pays more for an unencumbered property and the difficulty of finding a buyer for a right that ends with someone else's life is avoided.

Want to know how much your apartment or house is worth today, with or without usufruct? Get a free appraisal with Realio in less than a minute.