Owners of homes acquired by donation must hold full ownership for three years

The application of the reinvestment exemption for Personal Income Tax (IRPF) requires strict compliance with temporal and ownership requirements. A recent resolution from the Directorate General of Taxes (DGT) delimits the calculation of the time necessary for a home to be considered a habitual residence for the purposes of this tax relief.

What the DGT has resolved

The inquiry addresses the possibility of applying the exemption provided in Article 38 of the IRPF Law to the capital gain derived from the transfer of a home. The criteria establish that, to benefit from this relief, the transferred home must have been the taxpayer's habitual residence for a continuous period of at least three years.

The key point of the resolution is that this three-year period requires the taxpayer to have held full ownership of the home throughout that entire time. Consequently, it is not possible to count periods of residence in the home that precede the acquisition of ownership or full title to the property.

What this means for you

If you have acquired a home through a donation or any other title that does not grant you full ownership from the outset, the clock for the reinvestment exemption does not start ticking from the moment you move into the house, but from the moment you acquire full legal ownership.

If the transfer of the home occurs before three years of effective ownership have passed, the Administration will consider that the home has not met the habitual residence requirement. This implies that the capital gain generated by the sale will be subject to the corresponding taxation, without the possibility of applying the reinvestment exemption to a new home.

What you should do

It is necessary to verify the exact date on which full ownership of the home was obtained and compare it with the actual period of residence. In cases of acquisitions by donation or situations involving usufruct, the three-year calculation must be performed with precision to avoid contingencies with the Tax Agency. It is recommended to assess the legal status of ownership before proceeding with the transfer of the property.