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V2232-24 15 October 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Sale of non-primary residence does not qualify for reinvestment exemption

A taxpayer inquired whether capital gains from the sale of a property (which is not their primary residence) are exempt if the proceeds are used to pay off the mortgage on their main home. The Directorate General for Taxes (DGT) ruled that the reinvestment exemption cannot be applied because the property sold is not, and has never been, the taxpayer's primary residence.

The question raised

Whether the capital gain that might be obtained in the sale of the aforementioned dwelling would be exempt from Personal Income Tax.

The DGT's ruling

The transfer of a dwelling generates a capital gain or loss that forms part of the savings tax base. The exemption for reinvestment only applies to the transfer of the taxpayer's habitual residence. As the dwelling transferred is not the applicant's habitual residence, the gain obtained must be taxed.

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