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V1726-18 18 June 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Transfer of property under mortgage foreclosure is only exempt if it is the primary residence and requirements are met

A query was raised regarding whether the transfer of a property during mortgage foreclosure proceedings is exempt from Personal Income Tax (IRPF). The Directorate General of Taxes (DGT) ruled that the exemption only applies if the property is the debtor's primary residence and if the debtor has no other assets available to settle the debt.

The question raised

Taxation under Personal Income Tax regarding the transfer of a dwelling in a mortgage foreclosure proceeding.

The DGT's ruling

The exemption from capital gains in mortgage foreclosures requires that the property be the habitual residence of the debtor or guarantor. Furthermore, the owner must not possess other sufficient assets or rights to satisfy the debt. If these requirements are not met, the transfer generates a capital gain or loss that is integrated into the savings tax base.

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