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V3107-20 16 October 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Renovation works do not qualify as rehabilitation for reinvestment exemption unless they involve structural elements

A taxpayer inquired whether funds invested in the comprehensive renovation of a purchased property can be counted as reinvestment for the principal residence exemption. The DGT ruled that works are only considered rehabilitation if they address structural elements and comply with specific cost limits.

The question raised

Whether the amounts invested in the aforementioned works may be considered reinvested amounts for the purposes of applying the exemption for reinvestment in the primary residence under Personal Income Tax.

The DGT's ruling

For works to be assimilated with the acquisition of a dwelling, they must be rehabilitation works with the primary objective of reconstruction through the consolidation and treatment of structures, facades, roofs, or other analogous elements. Works of readaptation, redistribution, improvement, or renovation, such as changes to installations, floors, or ceilings, are not included. Furthermore, the global cost must exceed 25 percent of the acquisition price or market value of the building.

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