Two-year deadline for the primary residence exemption for those over 65

The application of the exemption in Personal Income Tax (IRPF) for the transfer of a primary residence is a matter of special interest for taxpayers who meet the age or dependency requirements. A recent binding ruling from the Directorate General of Taxes (DGT) clarifies the time limit for a property to be considered a primary residence for the purposes of this tax benefit.

What the DGT has ruled

The DGT has determined that, for the exemption provided in article 33.4.b) of the IRPF Law to proceed, the property must have been the primary residence at the time of the transfer or on any day within the two years prior to it. The criterion establishes that if the transfer occurs after more than two years have passed since the building ceased to be the effective residence, the property can no longer be considered a primary residence for the purpose of exercising said exemption.

What this means for you

This criterion directly affects individuals, especially those over 65 or persons in a state of dependency, who decide to sell their property after having ceased to reside in it. If the sale is postponed beyond the two-year period from the cessation of effective residence, the taxpayer will lose the right to apply the exemption to the capital gain derived from the sale and must pay tax on it according to current regulations.

What should be done

It is fundamental to verify the exact date on which the cessation of effective residence in the property occurred before proceeding with the transfer. Since compliance with this deadline is a determining requirement for accessing the tax benefit, it is necessary to assess each particular situation and the chronology of the property's occupation to determine the viability of the IRPF exemption.