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V0030-21 15 January 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Reinvestment exemption cannot be applied if the property ceased to be a primary residence more than two years ago

A taxpayer sought to sell a property that had been their primary residence until 2007, intending to reinvest the proceeds into another home. The Directorate General for Taxes (DGT) ruled that the exemption is inapplicable because the property ceased to be the taxpayer's primary residence more than two years prior to the sale.

The question raised

Whether the reinvestment exemption for the primary residence is applicable. If applicable, the method for calculating the resulting capital gain.

The DGT's ruling

For the reinvestment exemption, the transferred property must be the primary residence at the time of sale or have been so on any day during the two preceding years. If the property ceased to be the primary residence more than two years ago, this requirement is not met. The capital gain shall be calculated as the difference between the acquisition value (actual amount, improvements, and inherent expenses) and the transfer value (actual amount minus expenses and taxes).

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