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V2759-19 8 October 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Exemption for main residence does not apply if the property sold was not the main residence in the previous two years

A 72-year-old taxpayer inquired whether the sale of a jointly owned property is exempt from Personal Income Tax (IRPF), as they intend to purchase another home to reside in. The Directorate General for Taxes (DGT) ruled that, since the property was neither their main residence at the time of sale nor during the preceding two years, they cannot claim the main residence exemption or the reinvestment relief.

The question raised

Question raised: Whether the capital gain derived from said sale is subject to Personal Income Tax (IRPF).

The DGT's ruling

The transfer of real estate generates a capital gain or loss subject to Personal Income Tax (IRPF). To apply the exemption for individuals over 65 years of age, the property must be the taxpayer's primary residence at the time of the transfer or have been so during the two preceding years. If the property is not the primary residence, the exemption for reinvestment in another residence does not apply. Notwithstanding, for individuals over 65 years of age, the possibility of an exemption exists if the amount is used to establish an insured life annuity under the conditions set forth in the Regulations.

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