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V3276-20 4 November 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · exención por reinversión

Reinvestment exemption for principal residence may apply if funds are reinvested within two years

A married couple over the age of 65 has enquired whether they can apply the reinvestment exemption when selling their principal residence to purchase another. The Directorate General for Taxes (DGT) clarifies that the total amount obtained from the sale must be reinvested in the new property within a two-year period, whether this occurs before or after the sale.

The question raised

Whether the exemption for reinvestment in a primary residence is applicable.

The DGT's ruling

In order for the capital gain from the transfer of the primary residence to be exempt, it is necessary to reinvest the total amount obtained in the acquisition of a new primary residence. The reinvestment must be carried out within a period not exceeding two years, from date to date, from the transfer. If the reinvestment is less than the total amount obtained, only the proportional part of the gain corresponding to the amount actually invested shall be excluded. Both the transferred and the acquired residence must be primary residences.

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