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A taxpayer inquired whether transferring their primary residence in lieu of payment (dación en pago) to cancel a mortgage on a commercial premises is exempt from Personal Income Tax (IRPF). The Directorate General for Tax (DGT) ruled that the exemption only applies if the mortgage debt pertains to the primary residence itself.
Taxpayers using their home to settle debts related to other types of property will be subject to capital gains tax on the transaction.
The tax team reviews your specific situation.
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