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V2502-24 9 December 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Full value of new home may be considered reinvested even if financed via mortgage loan

A taxpayer inquired which amounts qualify as reinvested for the primary residence exemption if part of the sale proceeds are used to settle an existing mortgage, while the remainder is used to purchase and renovate a new home with the help of a loan. The DGT ruled that the amount is calculated by subtracting the outstanding principal of the previous mortgage, and that the new home counts as a full reinvestment regardless of whether own funds or a loan are used.

The question raised

Amounts that are considered reinvested amounts for the purposes of the exemption for reinvestment in the primary residence.

The DGT's ruling

To calculate the amount obtained from the sale, the transfer value must be reduced by the principal of the mortgage loan outstanding to be amortized. Reinvestment is understood to be carried out for the total acquisition value of the new dwelling, regardless of whether it is financed with own funds or with a mortgage loan. If the renovation works do not meet the requirements for structural rehabilitation, only the amounts destined for the acquisition of the dwelling shall be considered reinvested.

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