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V1674-19 8 July 2019 · 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 ceased to be a primary residence more than two years ago

A taxpayer inquired whether they could apply the reinvestment exemption for a primary residence after selling a property that ceased to be their main residence following a divorce in 2016. The Directorate General of Taxes (DGT) ruled that this is not possible because the property was neither a primary residence at the time of sale nor during the preceding two years.

The question raised

Whether it is possible to avail of the exemption for reinvestment in a primary residence.

The DGT's ruling

To apply the exemption, the transferred property must be the primary residence at the time of sale or have been so on any day during the two years prior to the transfer. In this case, as residency in the property ceased in 2016 due to a divorce decree, the requirement of habitual residence required by the Personal Income Tax Regulations is not met for the sale proposed in 2019.

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