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A taxpayer asks about the time frame to reinvest funds received from the allocation of a home to their ex-spouse during marital assets settlement. The tax authority responds that such allocation generates a patrimonial gain and that the reinvestment exemption requires reinvestment within a two-year period.
Question posed: The period available to reinvest what was obtained in the termination of co-ownership and apply the exemption for reinvestment in the primary residence.
The adjudication of real estate to one of the spouses in the liquidation of community property generates a capital gain or loss for the other if the adjudication exceeds their ownership share. To apply the exemption for reinvestment in the primary residence, the amount obtained must be reinvested in the acquisition or rehabilitation of a new primary residence within a period of two years, either before or after the date of transfer. The calculation of these periods is performed from date to date.
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