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V0113-21 28 January 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Spanish property not classed as habitual residence for non-residents, blocking reinvestment exemption

Taxpayers residing in Luxembourg enquired whether the sale of a property in Spain could be treated as the sale of a habitual residence to qualify for the reinvestment exemption. The Directorate General for Taxes (DGT) ruled that, as it is not their current habitual residence, they cannot benefit from this tax relief.

The question raised

In the event of proceeding with the sale of the aforementioned property to purchase another that will be their new primary residence in Spain, could the sale of the first be considered a sale of a primary residence for the purposes of the exemption for reinvestment in a primary residence?

The DGT's ruling

To apply the exemption, the transferred property must be the primary residence, understood as the residence for a continuous period of at least three years or due to circumstances that necessarily require a change of domicile. As the applicants reside abroad, the property in Spain does not hold that status. For it to become a primary residence again, they would need to reside in it for three years or demonstrate that a circumstance necessarily compelled the change of domicile.

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