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V1730-23 15 June 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Reinvestment exemption for construction requires reinvestment within two years and completion within four

The taxpayer asks whether the two-year period for reinvesting capital gains from a home sale into the construction of a new property can be extended due to builder delays. The DGT rules that two conditions must be met: the amount must be reinvested within two years and the construction must be completed within four years, unless legal exceptions apply.

The question raised

For the purposes of applying the exemption for reinvestment in a primary residence, the possibility of extending the established two-year period for reinvesting the capital gain obtained from the sale.

The DGT's ruling

To qualify for the exemption due to reinvestment in the construction of a primary residence, a dual condition must be met. First, the entire amount received must be applied to the construction within a period of two years from the sale of the previous residence. Second, the work must be completed within a period not exceeding four years from the commencement of the investment, unless the extensions of time provided for insolvency proceedings or exceptional circumstances not attributable to the taxpayer, as set forth in Article 55 of the RIRPF, are applied.

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