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V1371-22 14 June 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Reinvestment exemption cannot be applied if the sold property was never a primary residence

A member of the military queried whether a property acquired in 1996 could be considered a primary residence to qualify for the reinvestment exemption following its sale. The Directorate General for Taxes (DGT) ruled that, as the individual had never resided there, the legal requirements for said exemption are not met.

The question raised

Possibility of considering, given the military housing regime over time, that the property acquired in 1996 enjoys the status of habitual residence, allowing for the application of the exemption for reinvestment in a habitual residence regarding the capital gain that may arise from its transfer.

The DGT's ruling

To apply the reinvestment exemption, the transferred property must have been the taxpayer's habitual residence for a continuous period of at least three years. Since the property in question has never constituted the applicant's habitual residence, the exemption cannot be applied and the capital gain shall be subject to Personal Income Tax (IRPF).

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