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A married couple in community of property asks whether they can claim the reinvestment exemption when selling their habitual home to buy a share in another relative's new home. The DGT explains that the gain is split equally and the exemption depends on each spouse reinvesting their proportional share.
Question raised: Possibility of applying the exemption for reinvestment in the primary residence.
The capital gain from the sale of a marital home is attributed equally to each spouse. To qualify for the exemption, each must meet the reinvestment requirements regarding their 50 percent share of the gain obtained. If each spouse reinvests the entirety of their share in the acquisition of an undivided interest in the new home, the total gain shall be exempt. If the reinvestment is lower, only the proportional part of the gain corresponding to the amount effectively invested shall be excluded.
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