Personal Income Tax exemption for donation of primary residence: key requirements

The donation of a property, even if it is the main residence, carries the possibility of generating a capital gain or loss that must be taxed under Personal Income Tax (IRPF). Recently, the General Directorate of Taxes (DGT) has specified the strict requirements to access the exemption from this tax in specific cases.

What the DGT has ruled

The inquiry focused on determining whether a person over 65 years old could apply the exemption provided for in current regulations when donating their primary residence. The DGT's criteria establish that, for the capital gain derived from the donation not to be subject to tax, two simultaneous conditions must be met:

• Nature of the property: The donated home must hold the status of the taxpayer's primary residence, in accordance with the terms and circumstances established in the Personal Income Tax Regulations.
• Condition of the donor: The taxpayer must be over 65 years old or be in a situation of severe or great dependency.

If both requirements are not met jointly, the capital gain resulting from the operation will be subject to the corresponding taxation in the savings tax base.

What it means for you

If you are a homeowner and are considering donating your property, you should know that the operation is not tax-neutral. The exemption is not automatic simply by being over 65; it is imperative that the property is effectively your primary residence according to regulatory criteria. Likewise, the dependency status must be duly accredited so that the regulations allow for the avoidance of the tax impact of the capital gain.

What you should do

Before proceeding with the donation, it is necessary to verify that the requirements of the Law 35/2006 (LIRPF) and the RIRPF are strictly met. It is fundamental to check both the status of the primary residence and the age or dependency situation of the donor to avoid contingencies with the Tax Administration. It is recommended to assess each particular situation to determine the exact tax impact of the transfer.