The Tax Agency is warning Spaniards about personal income tax for owners of apartments or houses.

There are situations where taxpayers can benefit from the sale of their home and be exempt from the Individual Income Tax Payment (IRPF).

This includes those over the age of 65 and dependent persons who are not required to declare assets acquired.

The tax agency (AEAT) has issued a statement warning residential property owners of their tax liabilities when completing the sale of their properties.

According to AEAT, there are three taxes that sellers must pay.

The first is the well-known estate tax (IBI), which is divided between the buyer and seller in proportion to the time each has owned the property.

The second tax is the land appreciation tax, which is due within 30 business days of the sale of the home.

Finally, sellers also have to account for individual income tax (IRPF), where they need to report potential estate gains on their next tax year return.

NOTE TO HOMEOWNERS

However, there are situations in which taxpayers can benefit from the sale of their home and be exempt from IRPF.

This includes those over the age of 65 and dependent persons who are not required to declare assets acquired.

This also includes those who reinvest the money from the sale into the purchase of another home within two years before or after the transaction.

Regarding this option, both the home being purchased and the home being sold must meet the condition of being a permanent residence and the seller must have lived in the home being sold for at least three years.

In the event that no profit was made from the sale of the property, it is not necessary to declare this in the IRPF.

In addition, there are other ways to obtain an exemption from paying IRPF, such as transferring assets to settle debts or reinvesting in a permanent residence.

In the case of transferring property to settle debts, it is necessary to prove both the fact of insolvency and the absence of other assets in the declaration.

On the other hand, if a transfer of permanent residence occurs during reinvestment, it is necessary to declare the intention to take advantage of this option and ensure that the transferred property and/or renovated property meet the requirements for being recognized as a permanent residence.

The tax agency also provided clarification on its website regarding reinvestment in a permanent residence: "If the amount of reinvestment is less than the total received from the sale, only the proportional part of the property gain corresponding to the actually reinvested amount will be exempt from tax under the aforementioned conditions."

Additionally, it is important to consider the relevant sections in the tax year declaration.

According to the Organization of Consumers and Users (OCU), in 2022, box 1626 is where the cadastral number should be indicated in the case of economic activities related to transferred residential properties that are additional to the permanent residence.

Taxpayers should be aware of their tax obligations when selling property, including the proportional payment of IBI, capital gains tax on the land, and the declaration of potential property profits in the IRPF.

However, there are specific cases where one can be exempt from paying IRPF, such as for individuals over 65 years old, dependents, or those who reinvest money in the purchase of another permanent residence.

It is important to obtain information about the requirements and correctly fill out the relevant fields in the tax year declaration.