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V0397-20 20 February 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · arras penitenciales

Penitential earnest money received by the seller is taxed as a capital gain in the general tax base

A taxpayer over 65 enquired whether penitential earnest money received due to the failure to complete the sale of their primary residence was exempt. The DGT ruled that these amounts are taxed as a capital gain included in the general tax base.

The question raised

Taxation of the amount received as penitential earnest money, and in the event that said amount is taxed as a capital gain, whether it would be exempt from taxation pursuant to Article 33.4.b) of the Personal Income Tax Law (LIRPF).

The DGT's ruling

The receipt of penitential earnest money does not constitute a change in net worth due to an alteration in the composition of assets, but is instead integrated into the general tax base as a capital gain. This gain is attributed to the tax period in which its execution can proceed according to the contract. The exemption for the transfer of a primary residence for individuals over 65 years of age is not applicable because the transfer of the real estate property has not occurred.

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