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V0317-18 8 February 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

To exempt capital gains from home sales, only the amount from the element generating the gain must be reinvested

A taxpayer over 65 asks whether, to qualify for the life annuity exemption, they must reinvest the entire proceeds from the sale of their home or only the portion generating a capital gain. The DGT rules that, as full ownership and usufruct are independent elements, only the amount obtained from the element generating the capital gain must be reinvested.

The question raised

The amount that must be allocated to constitute a life annuity in order to benefit from the total exclusion from taxation of the capital gain generated in the transfer of the dwelling: the total amount obtained from the sale that proportionally corresponds to the part of which full ownership was held, or whether it also includes the amount obtained from the sale of the usufruct.

The DGT's ruling

Full ownership and usufruct are independent patrimonial elements that generate gains or losses separately. If the transfer of one generates a gain and the other a loss, to apply the exemption, only the amount obtained from the element generating the gain must be allocated to the life annuity, after deducting the expenses and taxes of the transfer.

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