B Law & Tax
13 March 2023

Tax Advisor: Analysis of the concept of principal residence for the purpose of the exemption of article 33.4.b) of the Personal Income Tax Act

It is established that the transfer of a home generates a capital gain or loss, which will be quantified by the difference between the acquisition value and the transfer value.

However, article 33.4.b) of the same law establishes that “all capital gains arising on the transfer of the habitual residence of persons over 65 or dependent persons are exempt from this tax”.

According to the binding ruling, the DGT examines the concept of main residence in more detail in relation to a case in which the taxpayer had abandoned his main residence for health reasons. Thus, it takes as its starting point additional provision number 33 of the Personal Income Tax Act and article 41 bis of the Personal Income Tax Regulations, which establishes that:

1. For the purposes of articles 7.t), 33.4.b) and 38 of the Tax Law, the taxpayer’s main residence is considered to be the building that constitutes his or her residence for a continuous period of at least three years. However, it shall be understood that the dwelling is considered to be the taxpayer’s permanent residence when, although this period has not elapsed, the taxpayer dies or there are other circumstances that necessarily require a change of address, such as marriage, separation, transfer of employment, obtaining the first job, or change of employment, or other similar justified circumstances.


  1. For the exclusive purposes of the application of the exemptions provided for in articles 33.4. b) and 38 of the Tax Law, the taxpayer shall be deemed to be transferring his main residence when, in accordance with the provisions of this article, said building constitutes his main residence at that time or would have been considered as such until any day in the two years prior to the date of transfer.”.

The simple census registration would not constitute, by itself, a sufficient element to prove residence and habitual residence in a certain locality, nor would the fact of registering in the IAE or transferring the tax domicile to a certain place.

The tax authorities therefore conclude that it appears that the property intended to be transferred constitutes the residence of the appellant for at least three years, so that the exemption provided for in article 33.4.b) of the Personal Income Tax Act could be applied.

B Law & Tax International Tax & Legal Advisors.


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