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V1189-22 26 May 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Gift of habitual home by those over 65 may be exempt from income tax; loan losses require specific legal conditions

The consultant asks whether donating their habitual home results in capital gain and whether a loss from an unpaid loan can be deducted. The DGT responds that the gain is exempt if the conditions of habitual home and age are met, and that loan losses are only deductible under specific legal circumstances.

The question raised

Whether the capital gain derived from the donation of the residence must be declared for Personal Income Tax purposes, and whether a capital loss may be accounted for regarding the amount of the unreturned and unrecoverable loan.

The DGT's ruling

The donation of a primary residence by persons over 65 years of age is exempt from Personal Income Tax (IRPF) provided that residency requirements are met. Capital losses arising from uncollected credits are only accounted for when the circumstances set forth in letter k) of Article 14.2 of the Personal Income Tax Law occur, such as the effectiveness of a debt write-off or the conclusion of insolvency proceedings without satisfaction of the credit. Non-payment alone does not automatically generate a capital loss.

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