Home sellers cannot apply the exemption if it was not their habitual residence in the last two years

The application of the exemption in Personal Income Tax (IRPF) for the transfer of a habitual residence requires strict compliance with temporal residence requirements. The Dirección General de Tributos (DGT) has specified the scope of this tax benefit after analyzing a case where the sold property had not been the taxpayer's residence during the period required by the regulations.

What the DGT has resolved

The tax authority has determined that, for the exemption provided for in article 33.4.b) of the IRPF Law to apply, the transferred home must constitute the taxpayer's habitual residence. This concept is not limited solely to the exact moment of the sale, but includes the possibility of having maintained residence in the home up to any day within the two years prior to the date of the transfer.

In the case analyzed, the taxpayer had ceased to reside in the property in 2006. Since the condition of habitual residence in the asset was not maintained during the two years prior to the sale, the requirement of habitual residence required by law to avoid the taxation of the generated capital gain is not met.

What it means for you

If you are the owner of a property and plan to sell it, you must take into account that the tax exemption is not automatic simply because it was your home in the past. The determining factor is the continuity of residence in the period of the two years immediately preceding the sale operation.

If the property has been rented, assigned, or simply left uninhabited for a period exceeding two years, the capital gain derived from the sale will be subject to the corresponding taxation in your tax return, without the possibility of claiming the exemption for a habitual residence.

What is advisable to do

Before formalizing a real estate sale operation, it is necessary to verify the history of effective residence in the home. It is fundamental to have documentation that proves the tax domicile and actual residence during the period of the last two years to avoid contingencies with the Tax Administration. Since each wealth situation presents different nuances, it is recommended to assess each case individually to determine the exact tax impact of the operation.