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V1549-19 25 June 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Reinvestment exemption denied if new property cannot be occupied within twelve months

A taxpayer sells their primary residence and purchases another to serve as their new home, but the new property is subject to an existing rental agreement for 26 months. The Directorate General for Taxes (DGT) rules that the exemption cannot be applied because the new property fails to meet the requirement of being a primary residence.

The question raised

Possibility of applying the exemption for reinvestment in the habitual residence regarding the capital gain obtained.

The DGT's ruling

For the exemption to apply, the new dwelling must be effectively and permanently inhabited by the taxpayer within a period of twelve months from its acquisition. As the dwelling is leased for 26 months, occupation within said period is not possible. Therefore, it does not qualify as a habitual residence and the reinvestment exemption is not applicable.

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