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V0766-24 17 April 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Mortgage principal may be considered reinvested amount for principal residence exemption

The taxpayer asks whether the principal of a mortgage can be counted as a reinvested amount for the exemption related to reinvestment in a principal residence. The Directorate General for Taxes (DGT) confirms that it can, provided that the reinvestment and construction completion deadlines are met.

The question raised

Yes, for the purposes of the exemption for reinvestment in the primary residence, the principal of the mortgage could be considered as a reinvested amount.

The DGT's ruling

For the exemption, the entire acquisition value of the new dwelling satisfied within the period of two years (prior or subsequent) to the sale of the old one is considered the reinvested amount. This is valid regardless of whether it is financed with own funds or through a mortgage loan. In the case of construction, the work must be completed within the period of four years from the start of the investment, except for legal extensions. Payments made outside the two-year period regarding the sale of the previous dwelling are not considered a reinvested amount.

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