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V1848-25 14 October 2025 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Reinvestment exemption not applicable if sold property was not habitual residence

The consultant asks whether the reinvestment exemption applies after selling a property that was their habitual residence until 2020, with plans to reinvest the proceeds. The DGT states that the exemption does not apply because the property was not considered a habitual residence at the time of sale.

The question raised

Whether the capital gain generated may be declared exempt pursuant to Article 38 of the LIRPF.

The DGT's ruling

The exemption for reinvestment under Article 38.1 of the Personal Income Tax Law (LIRPF) only applies to the transfer of the primary residence. For a dwelling to be considered a primary residence, it must have been the residence for at least three continuous years, unless circumstances such as a job transfer occur before the completion of said period. In this case, having ceased to reside in the dwelling in 2020 and selling it in 2024, the property is not a primary residence nor was it one during the two years prior to the transfer.

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