People over 65 can exempt the donation of their primary residence from Personal Income Tax

The transfer of a primary residence through donation is an operation that carries significant tax implications, especially when the transferor is a person over 65 years of age. The Dirección General de Tributos (DGT) has recently specified the criteria for applying the exemption of capital gains in this scenario.

What the DGT has ruled

The inquiry addresses whether the exemption provided in the Personal Income Tax Law (LIRPF) applies to the entirety of the gain when the primary residence is donated. The criterion establishes that, pursuant to article 33.4.b) of the LIRPF, people over 65 can benefit from the exemption of the capital gain derived from the transfer of their primary residence.

Regarding the calculation of the three-year period of effective residency required by the regulations, the DGT clarifies that, if the property was initially acquired as an undivided share and the remainder of the property was subsequently obtained through the dissolution of a co-ownership (condominio), the residency period will be calculated from the acquisition of the initial share. However, the administration emphasizes that residency must be effective and continuous, warning that simple municipal registration (empadronamiento) is not sufficient proof to certify this requirement.

What this means for you

If you are a person over 65 and plan to donate your primary residence, this criterion confirms the possibility of avoiding the payment of IRPF on the generated capital gain. However, the burden of proof lies with the taxpayer. It is not enough to appear on the municipal register; it is necessary to demonstrate that the home has been the real and constant center of your life.

Furthermore, for those who have consolidated ownership of their home through processes such as the dissolution of co-ownership, the time spent occupying their initial share of the property counts toward meeting the three-year residency requirement.

What you should do

In an operation of this nature, it is fundamental to gather evidence that proves effective residency, such as utility bills, service contracts, or any document that demonstrates permanence in the property. Given the importance of proof of residency and the correct interpretation of acquisition periods, it is recommended to assess each particular situation to ensure compliance with legal requirements before proceeding with the transfer.