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V0008-20 8 January 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Reinvestment exemption cannot be applied if the transferred property was not the main residence in the two years prior to sale

The taxpayer inquired whether they could apply the main residence reinvestment exemption by using the proceeds from the sale of their former family home to pay off the mortgage on their current residence. The Directorate General for Taxes (DGT) ruled that this is not possible because the property being sold ceased to be the taxpayer's main residence following their marital separation.

The question raised

Whether it is possible to avail of the exemption for reinvestment in a habitual residence in the event that the family home is transferred and part of the proceeds obtained is allocated to the cancellation of the existing mortgage credit on the current habitual residence.

The DGT's ruling

To apply the exemption, the transferred property must have been the taxpayer's habitual residence at the time of the sale or on any day during the two years prior to the transfer. In this case, as the judicial separation occurred in 2002 and the use was awarded to the former spouse, the property does not meet the requirement of having been the habitual residence within the two-year period required by Article 41 bis.3 of the RIRPF.

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