When a home is sold or bought depending on the age, the Treasury offers certain tax benefits to both parties. In the case of the People over 65 years of age who decide to sell their home, whether habitual or not, can benefit from deductions in their Income Tax return.
First of all, it is necessary to be clear about what the State Tax Administration Agency (AEAT) considers to be a habitual residence for the purposes of personal income tax, and it is included in the twenty-third additional provision of the Personal Income Tax Law and 41 bis Regulation. Broadly speaking, and as explained by the Treasury, it will be “the building in which you reside for a continuous period of at least three years” and? “It must be inhabited effectively and permanently by the taxpayer himself, within a period of twelve months, counted from the date of acquisition or completion of the works.”
When you sell a home, regardless of your age, you will have to declare the capital gains obtained in the Income Tax return. As has been said, the Tax Agency contemplates a series of tax benefits that can be obtained from the sale of the habitual residence and some of them are Exclusive for those over 65 years of age.
Tax benefits for those over 65 who sell their home
Through its website, the State Tax Administration Agency clarifies what the tax benefits for those over 65 they may have in the Personal Income Tax (IRPF) for the sale of their home.
Exemption for the sale of the habitual residence
According to article 33.4 and the fifteenth additional provision of the Personal Income Tax Law, as well as article 41 bis of the Regulation, the Treasury clarifies that Capital gains obtained from the sale of the primary residence will be exempt for those over 65 years of age.
This exemption will also apply if “Transmits bare ownership and reserves lifelong usufruct over the home.”
To do this, it must be taken into account that the habitual residence described above must be sold, and to do so, the same must be at that time or at least have been until “l“Two years prior to the date of transmission.”
One point to keep in mind is that this exemption cannot be applied when the full ownership of the home is divided into bare owner and usufructuary, in these cases neither of the two owners will be able to benefit from it.
Transfer of assets with reinvestment in annuities
In the case of those over 65 years of age who sell a property that is not your habitual residence, will be able to benefit from this personal income tax exemption provided that the capital gains derived from the operation are “destine within a period of six months“establish an insured annuity in your favor.” This is explained by the Treasury and is included in article 38.3 and the ninth additional provision of the Personal Income Tax Law and article 42 of the Personal Income Tax Regulations.
The iThe maximum amount that can be allocated to life annuities will be 240,000 euros. In the event that the amount that has been allocated to it is less than the capital gain obtained from the sale of the house “Only the proportional part of the capital gain obtained that corresponds to the reinvested amount will be excluded from taxation.”
In addition, the Treasury establishes a series of requirements who have to comply with the life annuities in which it is reinvested:
- The contract must be signed between the taxpayer (he will be the beneficiary) and an insurance entity.
- It must have a periodicity of less than or equal to one year, begin to be received within a period of one year from its constitution, and the annual amount of the income may not decrease by more than 5% with respect to the previous year.
- The insurer will have to be notified that the amount invested comes from the sale of a home in order to apply the exemption.
Formalization of a reverse mortgage
Those over 65 years of age who hire a reverse mortgage on their habitual residence will not have to pay personal income tax on the income received In this concept, it is stated in the fifteenth additional provision of the Personal Income Tax Law and the first additional provision of Law 41/2007, of December 7 (BOE of the 8th).
From the Tax Agency they clarify that these tax exemptions will take place as long as the reverse mortgage is carried out “in accordance with the financial regulation relating to acts of disposal of assets that make up personal assets to assist the economic needs of old age and dependency.”.