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V1346-25 16 July 2025 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Exemption for reinvestment not applicable if sold property was not habitual residence

The consultant asks whether reinvestment exemption can be applied after selling a rented property in 2021 and purchasing another at the same time. The tax authority responds that it is not possible because the sold property ceased to be the habitual residence in 2021 and fails the requirement of being so at the time of transfer or in the two preceding years.

The question raised

Possibility of applying for the exemption due to reinvestment in a habitual residence.

The DGT's ruling

For the reinvestment exemption, the transferred property must be the habitual residence at the time of the transfer or have been so on any day during the two years prior to said date. In this case, as residence in the property ceased in August 2021 in order to rent it out, it is not considered a habitual residence either at the time of the future sale nor during the preceding two-year period. Therefore, the exemption provided in Article 38.1 of the Personal Income Tax Law (LIRPF) is not applicable.

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