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A taxpayer inquired whether the amount allocated to mortgage payment protection insurance for a new home could qualify for the reinvestment exemption. The Directorate General for Taxes (DGT) ruled that it cannot, as such insurance is an expense linked to financing rather than an inherent cost of the acquisition.
This ruling limits the scope of the reinvestment exemption for capital gains tax, clarifying that financing-related costs are excluded from the acquisition value.
The tax team reviews your specific situation.
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