Spanish DGT limits main residence tax exemption for non-resident over-65 sellers

Tax residency change and property sale: key insights from the Spanish DGT

The Spanish General Directorate of Taxes (DGT), in ruling V2530-25, has clarified the scope of the over-65 main residence exemption, stressing its link to Spanish personal income tax (IRPF) status.

The case concerns an individual over 65 who lived for more than seven years in their main residence in Spain and then transferred their tax residence to France before selling, without reinvestment.

Under article 33.4.b) of the IRPF Law, capital gains from the sale of a main residence by individuals over 65 are generally exempt. This tax benefit aims to facilitate asset disposal at a later life stage.

However, the DGT highlights that the exemption only applies to Spanish tax residents at the time of sale. Once the taxpayer becomes non-resident, they fall outside the scope of IRPF.

This change triggers the application of Non-Resident Income Tax (IRNR) and the Spain–France double tax treaty, allowing taxation in both jurisdictions. In Spain, the gain is taxable as it derives from property located in Spanish territory.

Unlike IRPF, IRNR does not include an age-based exemption. The only available relief is the reinvestment exemption, applicable to EU/EEA residents, subject to reinvesting the proceeds in a new main residence.

As no reinvestment occurs, the capital gain is fully taxable in Spain, and the over-65 tax advantage is lost due to the change in tax residency.