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V2338-19 10 September 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Reinvestment exemption for principal residence does not apply to compensation for structural damage

A taxpayer inquired whether judicial compensation received for damage causing the ruin of their principal residence could qualify for the exemption for reinvestment in another home. The DGT ruled that, as there is no transfer of the property, the exemption does not apply.

The question raised

Treatment in Personal Income Tax of the compensation received and whether the exemption for reinvestment in a primary residence can be applied to the capital gain derived from the compensation received.

The DGT's ruling

The compensation for damages causing the ruin and demolition of a dwelling constitutes a capital gain or loss. This is calculated as the difference between the compensation received and the acquisition value of the asset (excluding the land), and is attributed to the period in which the judgment becomes final. The exemption for reinvestment in a primary residence is not applicable because no transfer of the dwelling has occurred, but rather the receipt of compensation.

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