Taxpayers may apply the seniority reduction if they do not exceed the 400,000 euro limit

The application of the seniority reduction in Personal Income Tax (IRPF) generates recurring doubts when a taxpayer has previously sold other assets. The Dirección General de Tributos (DGT) has clarified the scope of this tax benefit to avoid errors in the calculation of capital gains.

What the DGT has resolved

The inquiry focuses on the application of the ninth transitional provision of the IRPF Law. The criteria establish that, to determine whether the 400,000 euro transfer value limit has been exceeded, only assets sold since January 1, 2015, to which said reduction was already applied, should be counted.

A fundamental aspect of the resolution is that the transfer of assets acquired after December 31, 1994, is excluded from this calculation. Therefore, if the transfer value of the current asset does not exceed the 400,000 euro limit and there are no other previous sales with the reduction applied, the taxpayer is entitled to the seniority reduction.

What this means for you

If you are an individual who owns assets acquired before 1995, this criterion defines whether you can reduce the tax burden on the capital gain when selling them. The key lies in the sales history of other assets with seniority:

• Selective calculation: Not all your past sales count toward the 400,000 euro limit.
• Post-1994 assets: If you sold assets acquired after 1994, that amount does not reduce your ability to apply the reduction to your current sale.
• Control of previous benefits: Only the value of assets sold since 2015 that already benefited from the reduction impacts the limit.

What you should do

When transferring real estate or an asset acquired before 1995, it is necessary to maintain a detailed record of sales made since 2015. It is essential to identify which assets were subject to the seniority reduction to verify if the cumulative value of those transfers approaches the legal limit established in the current regulations.