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V2526-17 5 October 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Proceeds from the sale of a primary residence may be invested in investment funds prior to purchasing a new home

A taxpayer inquired whether funds from the sale of their primary residence could be placed in conservative investment funds before purchasing a new home. The Directorate-General for Taxes (DGT) ruled that this is permissible, provided the equivalent amount is reinvested within a two-year period.

The question raised

Whether the money derived from the sale of one's habitual residence may be invested in conservative investment funds until such time as the money is required for the purchase of the new dwelling.

The DGT's ruling

For the exemption due to reinvestment, it is not necessary that the funds obtained from the sale are directly and specifically the same as those used in the new dwelling, due to the fungible nature of money. It is sufficient that the taxpayer invests, within a period of two years (prior to or following the sale), an amount equivalent to the total amount obtained from the transfer. If the reinvested amount is lower than the amount obtained, the exemption shall be partial in proportion to the amount invested.

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