Sale of property by individuals over 65: habitual residence requirements

The Dirección General de Tributos (DGT) has issued a relevant ruling regarding the application of the exemption in Personal Income Tax (IRPF) for individuals over 65 when transferring their home. The core of the matter lies in the need to prove that the property constitutes the taxpayer's habitual residence.

What the DGT has ruled

The inquiry analyzes the possibility of applying the exemption provided for in article 33.4.b) of the LIRPF. The ruling establishes that, to benefit from this provision, the home must be the habitual residence at the time of the transfer or must have been so in the two years prior to the transfer.

In cases where the taxpayer has resided abroad and returns to Spain, the regulations require that the property maintains its status as a habitual residence. If, after returning, the individual does not reside in the home continuously for at least three years, the property may not be considered a habitual residence for the purposes of this exemption. A job transfer does not modify this requirement of effective residence to reach the necessary period.

What this means for you

This ruling directly affects individuals over 65 who plan to sell a property and wish to avoid taxation on the capital gain. If you have returned to Spain after a period of residence abroad, you must be cautious regarding the property you intend to sell.

If the home has not been your habitual residence in an effective and continuous manner during the period required by the regulations, the Tax Administration could deny the exemption, forcing you to pay tax on the gain obtained from the sale. Mere ownership of the property is not sufficient to trigger the tax benefit.

What you should do

It is necessary to verify the effective residence situation before proceeding with the transfer of any property. You must check whether the continuous residence periods required by the IRPF Law and its Regulations are met. Each situation involving international mobility or changes of address must be analyzed in detail to determine if the property maintains its status as a habitual residence before the Tax Agency.