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V1371-20 12 May 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Reinvestment exemption may be applied by using part of the funds to repay a mortgage

A taxpayer inquired whether funds from the sale of their primary residence could be used both to purchase a new home and to settle the mortgage on it. The Directorate General of Taxes (DGT) ruled that both amounts are considered part of the reinvested sum.

The question raised

Whether the exemption for reinvestment may be applied, and in particular, whether the portion allocated to the cancellation of the mortgage loan requested is considered a reinvested amount.

The DGT's ruling

For the exemption to apply, it is necessary to reinvest the amount obtained in the acquisition or rehabilitation of a new primary residence within a period of two years. The amount reinvested is considered to include both that which is used to satisfy the price of the new residence in the initial acquisition and that which is used to cancel the principal of the mortgage loan within the two years following the transfer.

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