Capital gains from the transfer of certain properties

Regulations: Thirty-seventh Additional Provision of the Personal Income Tax Law

1## Capital gains arising from the transfer of urban properties acquired for valuable consideration between May 12, 2012, and December 31, 2012 will be exempt by 50% ##.

The exemption applies to urban properties regardless of whether they are used in relation to economic activities.

This partial exemption is not applicable when the taxpayer has acquired or transferred the property to his or her spouse, to any person related to him or her by blood or marriage, up to the second degree included, or to an entity in respect of which any of the circumstances established in article 42 of the Commercial Code occur with the taxpayer or any of the aforementioned persons, regardless of residence and the obligation to prepare consolidated annual accounts.

In the case of reinvestment when the property transferred is the taxpayer's habitual residence and the amount reinvested is less than the total amount received in the transfer, the proportional part of the capital gain obtained will be excluded from taxation, once the exemption provided for in this Additional Provision has applied, which corresponds to the amount reinvested in the terms and conditions provided for the exemption for reinvestment of habitual residence in article 38 of the Income Tax Law. That is, the 50% exemption on the profit obtained from the transfer will be applied first. Of the other 50% of the profit, the proportional part corresponding to the reinvested amount will be exempt.

The conditions and requirements for the application of this exemption are discussed in section Profits excluded from taxation in cases of reinvestment , of this same Chapter.