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A taxpayer inquired whether the reinvestment exemption for their primary residence could be applied if the funds were used for extension works on a new property. The Directorate General for Taxes (DGT) ruled that the exemption only covers acquisition or renovation, specifically excluding extensions.
Taxpayers must ensure that funds intended for reinvestment exemptions are used strictly for the purchase or renovation of a new primary residence, as spending on property extensions or failing to hold full ownership of the new property will disqualify them from the tax relief.
The tax team reviews your specific situation.
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