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V2993-17 20 November 2017 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · ganancia patrimonial

Reinvestment in life annuities for tax exemption requires the actual net amount from the transfer

A taxpayer over 65 has enquired about the amount that must be reinvested in a life annuity to avoid taxation on the capital gains from a property sale. The Directorate General for Taxes (DGT) clarifies that the actual value of the disposal must be reinvested after deducting the expenses and taxes inherent to the transfer.

The question raised

1. Amount to be reinvested in order to qualify for the exemption for reinvestment in life annuities, provided for in Article 38.3 of Law 35/2006.

The DGT's ruling

To apply the exemption, the actual amount from the disposal, reduced by the inherent expenses and taxes paid by the transferor, must be allocated to the establishment of life annuities. If the reinvested amount is less than the total amount received, only the proportional part of the gain corresponding to the reinvested amount shall be excluded. The life annuities received shall be taxed as income from movable capital according to the age of the annuitant at the time of establishment.

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