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V0521-22 14 March 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Exemption from capital gains tax on sale of main residence depends on necessity of relocation

An individual over 65 with a disability sold their home after moving into a care facility due to health issues, without meeting the three-year residency requirement. The DGT states that the exemption will only apply if it is proven that the change of residence was a mandatory necessity rather than a voluntary decision.

The question raised

Whether the capital gain derived from the transfer of the dwelling is exempt from taxation under Personal Income Tax (IRPF), pursuant to the provisions of art. 33.4 b) of the LIRPF.

The DGT's ruling

For the transfer of the dwelling to be exempt, it must have been the habitual residence for at least three years or there must be circumstances that necessarily require a change of domicile. If the change of residence is not voluntary but imposed by an indispensable necessity, it may be considered the habitual residence even if the three-year period is not met. The assessment of whether the change of domicile was necessary is a question of fact that must be proven before the Tax Administration.

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