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V0659-24 15 April 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · dación en pago

Transfer of property in lieu of payment to settle alimony debts is not exempt from Income Tax

A taxpayer inquired whether the capital gain resulting from transferring 50% of their primary residence to settle a debt for damages (arising from alimony) is exempt from tax. The Directorate General for Taxes (DGT) ruled that the requirements for exemption regarding both transfers in lieu of payment and reinvestment are not met.

The question raised

Whether the capital gain that might be obtained in the deed in lieu of payment of the dwelling to settle the aforementioned debt would be exempt from Personal Income Tax.

The DGT's ruling

The deed in lieu of payment of a dwelling to cancel alimony debts does not qualify for the exemption for the deed in lieu of payment of a primary residence, as this requires debts with credit institutions or lending professionals. The exemption for insolvency proceedings, out-of-court payment agreements, or discharge of unsatisfied liabilities also does not apply. Finally, the requirements for reinvestment in a primary residence, as well as age or dependency requirements for the general exemption, are not met.

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