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A taxpayer sought clarification on whether proceeds from the sale of their primary residence could be used to repay a personal loan while still qualifying for the reinvestment tax exemption. The Directorate General for Taxes (DGT) ruled that this is not permitted, as the loan in question was not used for the acquisition of the property.
Taxpayers must ensure that funds from the sale of a primary residence are directly applied to the purchase of a new primary residence to benefit from the reinvestment exemption; using such funds to settle unrelated personal debts will result in the loss of the tax relief.
The tax team reviews your specific situation.
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