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A taxpayer inquired whether using personal funds to repay debt on a property acquired under community property regime would allow the entire amount to be treated as reinvestment. The Directorate General for Taxes (DGT) ruled that only half of the amount paid is considered such for the purpose of the tax exemption.
This ruling limits the tax relief available to taxpayers using separate assets to repay mortgages on properties held in common, effectively halving the deductible amount for capital gains tax exemptions in these specific circumstances.
The tax team reviews your specific situation.
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