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V0117-20 21 January 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Reinvestment exemption requires new property to be primary residence within two years

A taxpayer inquired whether they could apply for the reinvestment exemption after selling their primary residence to purchase an office premises and convert it into a home. The Directorate General of Taxes (DGT) stated that the reinvestment must take place within two years and that the new property must meet the requirements for a primary residence.

The question raised

Whether the exemption for reinvestment applies and the timeframe for effecting the reinvestment.

The DGT's ruling

For the exemption to apply, the gain must be reinvested in the acquisition or rehabilitation of a new primary residence within a period of two years (before or after) the transfer. The new property must be considered a primary residence, which requires effective and permanent residence therein. If occupation occurs within the twelve months following the acquisition, it is considered a primary residence from said date; otherwise, from the date effective residence begins, always within the two-year period.

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