Other requirements and conditions for the application of the exemption

A. Total or partial reinvestment

The reinvestment in the acquisition of a new home of the amount obtained with the transfer can be total or partial.

To apply the reinvestment exemption, it is not necessary to use in its entirety the money obtained from the sale of the previous home, and it is sufficient to apply money borrowed from a third party for the same purpose, either directly or as a consequence of subrogation in a loan previously contracted by the transferor of the property. Therefore, to consider the reinvestment carried out, the entire acquisition value of the new home will be taken into account, regardless of whether its amount has been paid or financed and whether said acquisition value of the new home is equal to or greater than that of the old one. , the reinvestment will be total. Otherwise it will be partial (Supreme Court Ruling No. 1230/2020, of October 1, 2020 -ROJ STS 3049/2020-).

When the amount of the reinvestment is less than the total amount obtained from the transfer, only the portion of the capital gain corresponding to the amount effectively reinvested is excluded from the tax, under the conditions outlined previously.

Keep in mind that in the case of partial reinvestment, the proportional part of the capital gain obtained will be excluded from taxation, once applied, if applicable, the exemption provided for in the thirty-seventh Additional Provision of the Law of IRPF (exemption of 50 percent of the capital gain obtained from the transfer of properties acquired between May 12, 2012 and December 31, 2012), which corresponds to the amount reinvested, in the terms and conditions provided for the exemption for reinvestment of habitual residence.

B. Reinvestment Term

The reinvestment of the amount obtained in the sale must be carried out, in one go or successively, in a period not exceeding two years , counted from date to date, which may be not only the subsequent ones but also the previous ones to the sale of the previous habitual residence.

The reinvestment is not made after the deadline if the sale was made in instalments or at a deferred price, provided that the amount of the instalments is used for the stated purpose within the tax period in which they are received.

C. Option to apply the exemption

In relation to the specific mode or form through which the option for the reinvestment exemption must be expressed, the following situations must be distinguished:

1. Reinvestment produced in the same year in which the capital gain is obtained or in the two previous years . In this case, no formal obligation is required in relation to the option for exemption, provided that its application is not contradicted by any other circumstance in the declaration for the same or subsequent years.
2. Reinvestment produced in the following two years . When the taxpayer intends to reinvest in the following two years, he must state in the declaration for the year in which he obtains the capital gain his intention to reinvest under the conditions and deadlines established by regulation, completing section F2 and the corresponding section. of Annex C.1 of additional information of the declaration model.

The completion of the corresponding section of Annex C.1, which constitutes a formal duty, does not, however, have a substantial or mandatory nature to be able to apply the reinvestment exemption, provided that the application of the exemption is not contradicted by any other circumstance of the declaration of the same or subsequent years.

See in this regard the Resolution of TEAC of September 8, 2016, in relation to the extraordinary appeal for the unification of criteria raised on this issue.

D. Failure to comply with the conditions of the reinvestment

Failure to comply with any of the conditions of the reinvestment determines the subjection to taxation of the corresponding part of the capital gain.

In such case, the taxpayer must allocate the part of the capital gain that is not exempt to the year of its obtaining, carrying out, for this purpose, complementary self-assessment including late payment interest.

This last declaration will be presented in the period between the date on which the non-compliance occurs and the end of the regulatory declaration period corresponding to the tax period in which said non-compliance occurs.

It must be carefully distinguished, depending on whether the non-compliance affects the reinvestment term or the reinvested amount. In the latter case, the right to exemption from the capital gain obtained corresponding to the reinvested amount is not lost.