Two-year limit for Personal Income Tax (IRPF) exemption on home sales for those over 65

The Directorate General of Taxes (DGT) has clarified the temporal conditions required for taxpayers over the age of 65 to benefit from the Personal Income Tax (IRPF) exemption when selling a property that no longer constitutes their primary residence.

What the DGT has ruled

The inquiry analyzes whether it is possible to apply the exemption provided in Article 33.4.b) of the IRPF Law when the transfer of the property occurs after a prolonged period since the taxpayer stopped living in it. The binding ruling determines that, to access this benefit, the property must be the primary residence at the time of sale or must have been so at any time during the two years prior to the transfer.

In the scenario presented, the DGT points out that if the transfer is carried out more than two years after the building ceased to be the primary residence, the exemption does not apply. The agency bases its decision on Article 41 bis.3 of the IRPF Regulation, establishing that the right to the exemption is lost if the two-year period from the cessation of primary residence is exceeded.

What this means for you

This ruling directly affects individuals who, being over 65 years old, intend to sell a property that is no longer their main residence. There is a belief that age is the only requirement, but the regulations demand a close temporal link between the primary residence and the date of the sale.

If you stop residing in your home and decide to sell it after a period exceeding two years, the Tax Administration will consider that you do not meet the requirements for the exemption, which will result in the obligation to pay tax on the capital gain obtained in your IRPF declaration.

What you should do

It is necessary to verify the exact date on which residence in the home ceased to calculate whether the sale operation falls within the legal two-year margin. Since the application of this benefit depends on the fulfillment of both temporal and residency requirements, it is fundamental to assess each particular situation to determine the tax burden that the transfer of the property will entail.