Divorced individuals may apply the reinvestment exemption if the ex-spouse retains the home

The application of the reinvestment exemption for the primary residence following a matrimonial breakdown has raised doubts regarding compliance with the requirement of the transferred property's habitual use. The Dirección General de Tributos (DGT) has issued a ruling that clarifies the necessary conditions for taxpayers to benefit from this provision under Personal Income Tax (IRPF).

What the DGT has ruled

The DGT establishes that, for the transferred home to be considered a primary residence for the purposes of the exemption, it is sufficient that the spouse remaining in it maintained it as their habitual residence at the time of the sale or during the two years prior to it. This criterion aligns with the need to prove that the property fulfilled the function of the main residence before the transfer.

Furthermore, the resolution confirms that the exemption is applicable if the new home was acquired within the two-year period prior to the sale of the old one. A relevant aspect is that it is not mandatory for the total funds obtained from the sale to be directly allocated to the new purchase; it is sufficient to reinvest an amount equivalent to the proceeds obtained from the transfer.

What this means for you

If you have sold your home after a divorce or separation, this criterion allows you to maintain the right to the reinvestment exemption provided that these points are met:

• Habitual use: The property sold must have been the primary residence, which is proven if the ex-spouse continues living in it.
• Deadlines: The acquisition of the new home may have occurred up to two years before the sale of the previous one.
• Amount: The reinvestment must cover the amount obtained from the sale to avoid the proportional part of the tax base.

What should be done

In an operation of this type, it is necessary to correctly document the residency situation of the spouse who remains in the property. The correct accreditation of habitual use and compliance with the reinvestment deadlines are fundamental to avoid contingencies with the Tax Administration. It is recommended to assess each particular situation to ensure that the amount reinvested is appropriate according to the sale price.