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Practical Income Manual 2021.

11. Transfers of assets in exchange for income

Regulations: Art. 37.1.j) Law Personal Income Tax  

Specific valuation standard

In these cases of transfers of assets in exchange for a temporary or life annuity, the capital gain or loss will be determined by the difference between the following values:

  • Actuarial financial present value of income.

  • Acquisition value of the transferred assets.

Important: If the asset transferred is the habitual residence and the transferor of the same is over 65 years of age or a person in a situation of severe dependency or great dependency, the capital gain that may be derived from this operation is exempt from Personal Income Tax

Assets acquired before December 31, 1994

In this case, if a capital gain is obtained, the part of the capital gain that was generated prior to January 20, 2006 (the only one to which the reduction or reduction coefficients will be applicable) must be distinguished from that generated later. to that date on which the reduction or abatement coefficients are not applicable.

The determination of the capital gain generated prior to January 20, 2006 and the application, where applicable, of the reducing coefficients will be carried out in accordance with the distribution rules discussed herein Chapter.


On November 10, 2021, Mr. SMT, 60, transfers his habitual residence in exchange for a life annuity, whose current actuarial financial value at the time of its constitution amounts to 180,000 euros, an amount that coincides with the market value of the property. living place. The annuity corresponding to the 2021 financial year is 15,000 euros.

The home was acquired on April 2, 1980 for an amount equivalent to 23,000 euros, including the expenses and taxes inherent to the transfer.

Since January 1, 2015, the taxpayer had not made a transfer of assets to whose gain the ninth transitional provision of the Personal Income Tax Law was applicable.

Determine the tax income derived from said operation in fiscal year 2021.


1. Determination of the capital gain or loss derived from the transfer of the home.

Transfer value: 180,000

Acquisition value: 23,000

Capital gain (180,000 - 23,000) = 157,000

2. Determination of the capital gain generated before 01-20-2006 (1):

Reducible capital gain (157,000 ÷ 15,197) x 9,424 = 97,359.22

3. Reduction calculation:

  1. Profit generated prior to 01-20-2006 subject to reduction (2)

    Maximum limit: 400,000

    ∑ Transfer value of assets with the right to reduction since 01-01-2015: 0

    Transfer value of the asset element to which DT9 Law of Personal Income Tax applies: 180,000

    Capital gain susceptible to reduction: 97,359.22

  2. Applicable reduction

    Number of years of stay until 12-31-1996: more than 10 years

    Reduction by abatement coefficients (100% xs/97,359.22) = 97,359.22

  3. Reduced capital gain

    Reduced capital gain: 0

4. Determination of non-reducible capital gain (generated as of 01-20-2006):

Non-reducible capital gain (157,000 –97,359.22) = 59,640.78

5. Computable capital gain (59,640.78 + 0.00) = 59,640.78

6. Determination of the return on movable capital derived from the annuity.

Investment income: (15,000 x 24%) (3) = 3,600

Notes to the example:

(1) The reducible capital gain is the one estimated to have been generated before 01-20-2006. Its determination is made in proportion to the number of days elapsed between the acquisition date (04-02-1980) and 01-19-2006, inclusive, which amounts to 9,424 days, with respect to the total number of days elapsed between the date of acquisition and that of transmission (10-11-2021), which is 15,197 days. (Back)

(2) As the maximum applicable limit on the transfer value is 400,000 euros and, in this case, the transfer value with the right to the application of reducing coefficients is 180,000 euros without any other transfer with the right to the application of the ninth transitional provision of the Personal Income Tax Law , the reducing coefficients will be applied to the entire amount of the capital gain generated prior to 01-20-2006. (Back)

(3) The percentage of 24 percent corresponds to the age of the annuitant (60 years) at the time of constitution of the annuity (year 2021) and will remain constant throughout its validity. See, in this regard, within Chapter 5, the heading " Life or temporary annuities derived from the taxation of capital ". (Back)