When we talk about houses, one of the most frequent doubts revolves around the reinvestment in the selling of the habitual residence and what benefits at IRPF has this operation. That is, what tax benefits do you have if you invest the money from the sale of your old house to buy a new one. In this article we explain it to you.
Requirements for exemption from income tax on reinvestment in habitual residence
One of the concepts that need to be clarified is the one of the habitual house, since both the house that is bought like the one that is sold must be it to apply the exemption. When we speak of habitual residence we refer to that which constitutes, for tax purposes, residence for a continuous period of at least three years.
In order for the new home to be considered as habitual housing, the taxpayer has to occupy it within a maximum period of 12 months and maintain it for a minimum of three years. If you leave before that time, you must return the money you reduced from the IRPF, unless it is for reasons of weight such as a divorce or a job transfer.
Timelines for reinvestment in regular housing
In general, reinvestment must be made within a period of two years before or two years after the sale. Outside of that period, the sale would be considered in the income statement as an equity gain, so that the type of savings tax would be applied, in its progressive scale of 19-21-23%.
How to reinvest in regular housing?
The Tax Agency considers as equity gain the difference between the sale price of the house less the purchase price, applying a series of adjustments to the values of acquisition and transmission (such as adding taxes paid on the first purchase). When determining the value of that profit, it should be included in the income statement, which we already explained what deadlines and developments brought for 2017. The gain obtained will be exempt from taxation if the conditions mentioned in the previous section are fulfilled.
Re-invest in rehabilitation?
In addition to reinvesting the money from the transfer of the habitual residence, it can be reinvested in rehabilitation if:
– The works have been classified as a protected action in the matter of housing rehabilitation.
– The main objective of the works is the reconstruction of the house by means of the consolidation and treatment of façades, structures, roofs and the like.
That is, it does not take into consideration a change of floors, bathroom or kitchen.
If you are going to sell a house and you plan to buy another, we recommend that you contact a consultant to consult the best options that exist to avoid paying the IRPF. At GM Tax we study your case in particular and use our experience to draw the conclusions that are most favorable. Contact us!