The Tax Law establishes that the sale of a home is exempt from paying personal income tax when the capital gain -the benefit, or the difference between what it cost and what it is sold for- is used to buy another home.
However, according to , this income must meet a series of conditions in order to benefit from tax savings.
1. Only for habitual residence
The tax reduction can only be enjoyed by those who sell a habitual residence and use the benefit to buy another habitual residence.
For tax purposes, the residence in which the taxpayer resides for a continuous period of at least three years is considered a habitual residence. On the other hand, for the acquired home to constitute the habitual residence of the taxpayer, it must be inhabited for a period of twelve months, counted from the date of acquisition.
2. In the two years before or after
To avoid the payment of IRPF, the profit from the sale of the home must be reinvested in the following two years from the date of sale.
It is also possible that the purchase is in the two years prior to the sale of the home. As stated in the Personal Income Tax Law, reinvestment “does not mean investing in the new home exactly the money obtained specifically and directly from the transfer of the old home”, but rather that you may have used your savings to buy the new home and then enjoy the exemption when you sell your habitual residence in the following two years.
3. If the mortgage has not been paid off…
If the house that is sold still has a pending mortgage, the total amount obtained will be considered, exclusively for these purposes, the result of reducing the transfer value in the principal of the loan that is pending amortization at the moment of the transfer. .
4. If the new house is cheaper than the one you sold
If the amount obtained from the sale of the home is greater than the amount used to buy the new house, only the reinvested part will be excluded from the tax. The rest of the money will count as capital gain.
5. This is how the exemption is collected in the income statement
A) When the reinvestment occurs in the same financial year in which the capital gain is obtained or in the two previous years, it is not necessary to do anything, provided that the application of the same is not denied by any other circumstance of the declaration of the same or subsequent exercises.
B) When the taxpayer intends to reinvest the money in the two years following the sale, he must state his intention to reinvest the income in the tax return for the year in which he obtains the capital gain, completing section F2 and the corresponding section of Annex C.1 for additional information on the declaration model.
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