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V1493-19 21 June 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Donation of primary residence by individuals over 65 may be exempt from Personal Income Tax

A taxpayer over the age of 65 has enquired whether donating their primary residence to a child triggers a capital gain subject to Personal Income Tax (IRPF) and whether the relevant exemption can be applied. The Directorate General for Taxes (DGT) has ruled that while the transaction generates a capital gain or loss, the exemption is applicable provided the requirements regarding age and primary residence status are met.

The question raised

Whether the capital gain derived from said operation is subject to Personal Income Tax (IRPF). Whether it may qualify for the exemption for the transfer of a habitual residence by persons over 65 years of age.

The DGT's ruling

The donation of real estate generates a capital gain or loss as a variation in equity occurs. If the transferor is over 65 years of age and the real estate is their habitual residence, the resulting capital gain shall be exempt pursuant to Article 33.4.b) of the Personal Income Tax Law (LIRPF). To be considered a habitual residence, it must have served as a residence for at least three continuous years, or meet the legal exceptions regarding change of domicile.

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