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V4533-16 ·20 October 2016 ·consulta-vinculante Medium impact
Tax

Income tax exemption for debt forgiveness in lieu of payment does not apply if the creditor is not a credit institution or lending professional

A taxpayer inquired whether the transfer of their primary residence to settle a mortgage debt is exempt from Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that the exemption does not apply because the debt is held with a company that is neither a credit institution nor professionally engaged in the lending business.

In 6 key points

How it affects those involved

This ruling clarifies that the tax exemption for debt forgiveness in lieu of payment is strictly limited to transactions involving professional lenders or credit institutions, meaning taxpayers cannot claim this relief when settling debts with non-financial entities.

Lifecycle

2016-10-20PublishedPublished 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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