The reinvestment period required to qualify for the personal income tax exemption on the sale of a primary residence has been suspended during the state of emergency. According to the Spanish Tax Agency (DGT), for the purposes of the two-year period for reinvesting the proceeds from the sale of the previous residence in a new home, the calculation of this period is considered suspended from March 14, 2020, to May 30, 2020.
If you sold your main residence a few months ago and made a capital gain, remember that this gain is exempt from income tax (IRPF) provided you reinvest the proceeds in the purchase of a new main residence. However, to qualify, you must purchase the new residence within two years of selling the old one. If you fail to reinvest within this timeframe, you will be required to file an amended income tax return for the year of the sale and pay the difference plus late payment interest.
It should be noted that the limitation and expiry periods for actions and rights contemplated in tax regulations have been suspended during the state of emergency until May 30, 2020. The Directorate General of Taxes (DGT) clarifies, in the specific case of reinvestment in a primary residence, that this suspension extends to the reinvestment period.
The Personal Income Tax Law provides for an exemption on the sale of a taxpayer's primary residence, provided that the entire proceeds from the sale are reinvested in the purchase of a new primary residence. The tax regulations require that this reinvestment be made either in a single transaction or in successive transactions within a period not exceeding two years from the date of the sale.
Given the current health crisis, it may be difficult to comply with this temporary requirement in certain cases.
In the binding rulings CV1115-20, V1117-20 and V1118-20, all dated April 28, 2020, the DGT clarifies that:
a) Royal Decree-Law 11/2020, of March 31, establishes that from the entry into force of Royal Decree 463/2020, of March 14, by which the state of alarm was declared, the limitation and expiry periods of any actions and rights contemplated in the tax regulations are suspended until April 30, 2020.
b) The subsequent Royal Decree-Law 15/2020, of April 21, extended that suspension until May 30, 2020.
c) Accordingly, for the purposes of the two-year period provided for reinvestment in a new home of the amount obtained from the sale of the old home, it must be understood that the calculation of said period is suspended from 14 March 2020 until 30 May 2020.
You can contact this professional office with any questions or for further clarification you may have.
Best regards,
Do you have any questions about this topic?
Our team of expert advisors will help you resolve any issues related to our services.
Contact us now
A Àmbit Assessor, SL has 40 years dedicated to the tax, comptable and labor consultancy of the Pime.
Latest entries from MGI Àmbit
(see all)
Related
