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V2192-19 16 August 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Two-year deadline for main residence reinvestment exemption cannot be extended

A taxpayer inquired whether the two-year period for reinvesting proceeds from the sale of their main residence could be extended due to bureaucratic delays in obtaining a building permit. The Directorate General of Taxes (DGT) ruled that there is no regulation allowing for an extension of this period and that the acquisition must take place within the two-year timeframe.

The question raised

Question posed: Possibility of extending the period for reinvestment and allowing the capital gain generated from the transfer of the primary residence to be exempt from taxation, given the circumstances occurring beyond the taxpayer's will. Tax effects if the acquisition is not made within the two-year period. Possibility of applying for the exemption based on construction certificates paid within the two years following the transfer. Whether, upon acquiring the new residence after more than two years have elapsed since the transfer, the exemption may still be applied for.

The DGT's ruling

The legal acquisition of the new residence must occur within the two years following or preceding the transfer of the primary residence. There is no regulation allowing for the extension of this period due to causes beyond the taxpayer's control. If the acquisition is not made within the timeframe, the right to the exemption is lost and the tax situation must be regularized. It is also not possible to exempt part of the gain based on payments made within the period if there is no legal acquisition.

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