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V3272-20 4 November 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Reinvestment exemption applies if proceeds from sale of main residence replace savings used to purchase a new home

The taxpayer asks whether the exemption for reinvestment in a main residence can be applied if the new home was already purchased using savings prior to the sale of the old one. The DGT rules that this is possible, as money is fungible and regulations allow the exemption if the sale proceeds are used to replace the funds invested in the new property within a two-year period.

The question raised

Possibility of applying the exemption for reinvestment in a primary residence if the amount obtained from the transfer of the primary residence is used to replace the own funds with which a new primary residence was acquired.

The DGT's ruling

For the exemption to apply, it is necessary that the amount obtained from the transfer of the former residence serves to finance the new one or to replace the personal savings invested in it. Absolute identity between the funds received and those paid out is not required, given the fungible nature of money. Reinvestment may take place within the period of two years prior to or following the transfer. In this case, the exemption applies to the amount obtained corresponding to the replacement of the savings invested in the new primary residence.

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