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V1546-19 24 June 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Income tax exemption for the sale of primary residence may apply in insolvency proceedings

A query was raised regarding whether the sale of a debtor's primary residence during the liquidation phase of insolvency proceedings, conducted to a third party to settle mortgage debts, allows for an exemption from capital gains tax. The Directorate General for Taxes (DGT) has ruled that such an exemption can be applied, provided all legal requirements are met.

The question raised

Tax treatment under Personal Income Tax regarding the sale of the primary residence that secures mortgage loans in insolvency proceedings. Application of the exemption provided for in Article 33.4.d) of the Tax Law.

The DGT's ruling

The capital gain arising from the transfer of the dwelling to a third party, judicially authorized during the liquidation phase of insolvency proceedings to settle the mortgage debt, may benefit from the exemption provided in Article 33.4.d) of the Personal Income Tax Law. To this end, the other requirements established in said legal provision must be met.

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