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V0266-22 14 February 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Reinvestment exemption requires the property to be a primary residence or for circumstances to necessitate a change of domicile

A taxpayer has enquired whether the gain from the sale of their property is exempt, having previously rented it out and been unable to occupy it due to issues with a tenant and the pandemic. The DGT clarifies that for the exemption to apply, the property must be the taxpayer's primary residence (residing there for three years) or there must be circumstances that strictly necessitate a change of domicile.

The question raised

Whether the capital gain derived from the sale of their dwelling would be exempt.

The DGT's ruling

To apply the exemption for reinvestment, the dwelling must be a primary residence, which requires continuous residence for at least three years. This period may be excepted if circumstances arise that necessarily require a change of domicile, implying a mandatory requirement that remains outside the will or convenience of the taxpayer. The taxpayer must sufficiently prove these circumstances to the Administration through means of evidence admitted in Law. If the dwelling does not reach the status of primary residence before the sale, the exemption may not be applied.

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