Exemption for reinvestment in housing after selling a VPO property

The sale of a social housing property (VPO) after the expiration of its protection period raises questions regarding the possibility of applying tax benefits. Recently, the General Directorate of Taxes (DGT) has clarified whether taxpayers can benefit from the reinvestment exemption on the capital gains obtained in these transactions.

What the DGT has ruled

The query focused on whether it was possible to apply the capital gains reinvestment exemption when selling a VPO property once its protection period has elapsed. The DGT's criteria establish that to access this benefit, the transferred property must have been considered the taxpayer's primary residence.

A primary residence is understood to be that which has served as a residence for a continuous period of at least three years, or due to exceptional circumstances. This primary residence condition must be met for both the property being sold and the one being acquired. The regulations allow for the transferred property to have been a primary residence at the time of sale or on any day during the two years prior to the date of the transfer.

What this means for you

If you are an individual who has resided in a social housing (VPO) property and decide to sell it after its protection period ends, the nature of the housing (VPO) does not prevent the use of the reinvestment exemption. The determining factor is not the housing protection regime, but rather that it has fulfilled the function of a primary residence under the temporal and usage requirements established in the IRPF regulations.

What you should do

To correctly apply this tax benefit, it is necessary to verify that the following points are met:

• That the property sold has been your primary residence for at least three years or due to exceptional causes.
• That the primary residence condition is maintained in the new property acquired.
• That the transfer and the reinvestment comply with the deadlines and conditions provided in the IRPF Law and its Regulations.

Each situation presents particularities that require a detailed analysis of effective residence and reinvestment deadlines.