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V1776-16 ·21 April 2016 ·consulta-vinculante Medium impact
Tax

Transfer of primary residence in lieu of debt is exempt from Income Tax subject to certain requirements

A query was raised regarding whether the transfer of a property in lieu of debt to cancel a mortgage incurs Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that the resulting capital gain is exempt, provided the property is the owner's primary residence and the owner has no other assets available to settle the debt.

In 6 key points

How it affects those involved

This ruling provides legal certainty for homeowners facing foreclosure, confirming that transferring their main home to a bank to settle a mortgage does not trigger a capital gains tax liability under specific conditions.

Lifecycle

2016-04-21PublishedPublished in the BOE
Official text Based on BOE data (boe.es). Information, not advice.

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This analysis is informational only and does not constitute legal advice or create a client-adviser relationship. BM Consulting.
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