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V5309-16 15 December 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · dación en pago

Exemption for debt settlement in lieu of payment does not apply if the property is not the primary residence

A taxpayer inquired whether the transfer of a property to settle a mortgage debt is exempt from Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that the exemption only applies if the transferred property constitutes the debtor's primary residence.

The question raised

Whether the exemption provided for in Article 33.4.d) of the Personal Income Tax Law will apply to the transfer of the dwelling.

The DGT's ruling

The exemption under Article 33.4.d) of the Personal Income Tax Law requires that the dation in payment pertains to the habitual residence of the debtor or guarantor. Furthermore, the owner must not possess other sufficient assets to satisfy the debt. As the dwelling subject to the transfer is not the habitual residence of the applicant, the exemption is not applicable.

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