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V2798-18 25 October 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Full exemption on residential sale gains requires reinvestment of the total proceeds

A married couple inquired about the amount they must reinvest in a new property to ensure the capital gains from the sale of their previous home remain exempt, noting their intention to pay off the new mortgage. The Directorate General for Taxes (DGT) ruled that to qualify for a full exemption, the total amount obtained from the sale must be reinvested.

The question raised

Amount that should be reinvested in the new residence so that the entirety of the capital gain generated remains fully exempt.

The DGT's ruling

In order for the capital gain from the transfer of the primary residence to be fully exempt, it is necessary to reinvest the total amount obtained in the acquisition or rehabilitation of a new primary residence. This reinvestment must be carried out within a period of two years, either before or after the date of disposal. If the amount reinvested is less than the total amount obtained, only the proportional part of the gain corresponding to the amount actually invested shall be excluded from taxation.

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