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V2646-18 2 October 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · dación en pago

Transferring primary residence as payment in lieu of cash may be exempt from Income Tax and Property Transfer Tax

A query was raised regarding whether transferring a primary residence to a third party via 'dación en pago' (payment in lieu of cash) to cancel a mortgage allows for Income Tax (IRPF) and Property Transfer Tax (IIVTNU) exemptions. The Directorate General for Tax (DGT) ruled that this is possible if the creditor imposes or accepts this condition to extinguish the debt.

The question raised

Whether the transfer of the primary residence to a third party would be exempt by application of article 33.4.d) of the LIRPF and article 105.1.c) of the TRLRHL.

The DGT's ruling

Accord and satisfaction does not lose its nature if it is carried out in favor of a third party other than the creditor, provided that the latter accepts the transfer as extinguishing the obligation. The regulations do not require that the accord and satisfaction be made exclusively in favor of the credit institution. For the exemption, the requirements of being a primary residence, canceling a mortgage debt with a professional entity, and not having other sufficient assets to pay the debt must be met.

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