The income statement campaign has just begun and it is time to render accounts to the Treasury. Among all the operations subject to tax is also the sale of a home, for which personal income tax will have to be paid as long as the sale price is higher than the purchase price. Or at least, it will be like this as long as the requirements to benefit from the exemptions provided by the treasury are not met.
And it is that, according to the experts of the real estate comparator HelpMyCash.com, there are two exceptional circumstances where the owner will not have to pay personal income tax, despite having obtained profits from the sale of his property in 2022. What are these exceptions? If you reinvest the money in a habitual residence or if the owner is over 65 years of age and meets some additional requirements.
It may be because the children left home, or because the family has grown and they need more space, but regardless of the reason, there are many Spaniards who sell their home to buy another. In these cases, the Tax Agency contemplates an exemption for reinvestment in habitual residence. Thanks to it, owners avoid paying personal income tax as long as they meet a series of conditions. As which?
HelpMyCash specialists explain that the home that is transferred must be the taxpayer’s habitual residence. This means that he must have resided there for a continuous period of at least three years. In addition, the new property must be his habitual residence, for which he must inhabit it effectively and permanently within a period of twelve months from the date of purchase or completion of works, if it is a home new.
And that’s not all. For the owner to be exempt from paying personal income tax, the reinvestment must be made within a maximum period of two years. This means that no more than two years can pass between the sale of the old residence and the purchase of the new one; or, that this term cannot be exceeded between the purchase of the new habitual residence and the sale of the old one.
HelpMyCash specialists warn, however, that the owner must include the sale of the home in his income statement, and must even specify that he is eligible for the exemption for reinvestment in habitual residence, especially if he plans to reinvest the money in the next two years.
Owners over the age of 65 who have sold their primary home in 2022 do not have to declare the capital gain derived from the sale of their home. This is always the case, regardless of whether or not the money is reinvested in a new residence.
Likewise, if the property that is sold does not constitute the habitual residence of the taxpayer, there is an exemption for reinvestment in life annuities. To qualify, the owner must be over 65 years of age and reinvest the money in contracting a life annuity within a period not exceeding six months from the sale. The maximum term whose reinvestment gives the right to enjoy the exemption is 240,000 euros and the income must be less than or equal to one year.
The sale of a home is almost always subject to the payment of personal income tax. But if the owner meets the necessary requirements to take advantage of one of these two exemptions, he will avoid paying a large sum of money in taxes.
