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V1182-23 9 May 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Reinvestment tax exemption may apply through property renovation, provided legal requirements are met

A taxpayer inquired whether they could apply for the reinvestment exemption by selling their primary residence to renovate another property intended to become their new home. The Directorate-General for Taxes (DGT) stated that property renovation is treated as an acquisition, provided all legal requirements are satisfied.

The question raised

Question posed: Possibility of applying the reinvestment exemption on a primary residence.

The DGT's ruling

The exemption is applicable if the total amount obtained is reinvested in the rehabilitation of a dwelling within a period of two years. For the rehabilitation to be valid, it must comply with the requirements of Article 41.1 of the RIRPF, such as being subsidized works or having the purpose of reconstruction with a global cost exceeding 25% of the value of the dwelling. Both the transferred and the rehabilitated dwelling must be primary residences.

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