If you have obtained a gain from the sale of your main residence in the last four years, this gain may be exempt from personal income tax, and if you had to pay, we can ask the Inland Revenue to return the money to you. The Inland Revenue changes its criteria, forced by Justice, on reinvestment in your primary residence.

Supreme Court ruling 1239/2020 of 1 October 2020 changed the criteria for valuing reinvestment, so that the reinvestment is considered to be the cost of acquiring the new home. Whether or not it has been financed, totally or partially.

In the case of self-construction, the period for reinvestment is extended from 2 to 4 years, increasing the period for self-construction to 4 years.

The exemption for reinvestment in the main residence will have occurred if, within the two years before and the two years after the sale, you use the amount obtained to purchase a new main residence. In these cases, you may decide to reinvest the sums received from the sale in the purchase of an "off-plan" home, which is therefore not built.

The criteria of the Treasury and the Supreme Court

The tax authorities' criteria until now considered that in order to benefit from the exemption it was not sufficient for the amounts obtained to be used to pay for the work. The tax authorities required that the work had already been completed and that the taxpayer had acquired ownership of the property and formalised the deed of sale.

The criterion of the Supreme Court has been contrary to that of the Treasury, considering that the exemption is applicable if the economic reinvestment is made, as long as there are payments to the promoter within the two years, even if the deed is formalised later and therefore its next possession. According to the Court, the law only speaks of reinvestment, without expressly requiring that the purchase of the property be deeded within the two-year period.