We explain you two exemptions in the IRPF that you can benefit from if you sell a house in the Canary Islands: Exemption for reinvestment in habitual residence and exemption for people over 65 years old.
When we face the sale of a house, there are many expenses and taxes to be faced. One of the biggest is probably the payment of personal income tax. However, although it is mandatory to declare the capital gain obtained in the Income Tax Return, not everyone has to pay for it.
If you want to know how to save on taxes when selling a house in the Canary Islands, keep reading this article.
*In the same way, next we leave you with all the deductions in habitual housing in the Canary Islands for the Exercise of the Income 2023. Download the Renta 2023 Manual and access to the existing deductions in housing in the Canary Islands to which you can apply in your next Income Tax Return.
Manual Renta 2023 in the Canary Islands [Deducciones en vivienda]
Exemptions from personal income tax when selling a home
The personal income tax exemptions when selling a house change according to the capital gain obtained and the type of house involved in the transaction. Thus, we find the following tax benefits:
Exemption for reinvestment in primary residence
If you reinvest the profit you have obtained from the sale of your home in the purchase of another primary residence or in its rehabilitation, you are exempt from paying tax to the tax authorities for the part you have reinvested. The Tax Agency describes the habitual residence as one in which the owner lives for 3 years continuously and is registered as a resident. This period may be less than 3 years in special circumstances such as:
- Death of the taxpayer.
- If the taxpayer is recognized as disabled and his current home does not meet his needs.
- Other exceptional circumstances such as: marriage, divorce, obtaining first job, job transfer or change of employment.
Exemption for seniors over 65 years of age
Persons over 65 years of age are exempt from paying IRPF if they sell their primary residence , regardless of whether or not they reinvest the profit obtained in another property. This tax advantage can also be enjoyed in the case of transferring the bare ownership and reserving the life usufruct on the property.
If the property being sold is not a primary residence but they reinvest the profit obtained in an annuity plan, they will not have to pay IRPF either.
Other groups that are also exempt from paying Personal Income Tax on the sale of a primary residence are people in a situation of severe or great dependence.
How the sale of a real estate property is taxed for personal income tax purposes
But, what if I cannot benefit from any personal income tax exemption when selling a house? How much will I have to pay in my Income Tax Return?
Everything will depend on the profit you get from the operation. The income tax brackets to be applied to capital gains are defined as follows. In the table you can also see the changes introduced with respect to 2022.
| Income brackets Personal Income Tax (IRPF) | Tax rate (2022) | Tax rate (2023) |
|---|---|---|
| Up to €6,000 | 19 % | 19 % |
| From 6,000 € to 50,000 €. | 21 % | 21 % |
| From 50,000 € to 200,000 €. | 23 % | 23 % |
| From 200,000 € to 300,000 €. | 26 % | 27 % |
| More than €300,000 | 26 % | 28 % |
Other housing tax benefits
The Tax Agency also stipulates a series of tax benefits associated with housing when filing the Income Tax Return. We are referring to:
- Deduction for investment in primary residence.
- Deduction for energy rehabilitation works and refurbishment of the habitual residence.
- Deduction for works of adaptation of the habitual residence by people with disabilities.
- Deduction for renting a primary residence.
- Deduction for renting a primary residence linked to certain dation in payment transactions.
- Deduction for expenses on credit insurance premiums to cover non-payment of rent on residential leases (deduction of the lessor).
In Destiny Home we have prepared the Manual de la Renta 2023 in the Canary Islands, a PDF where we explain each one of the deductions in habitual residence to which you will be able to benefit in your Income Tax Return this year.
Manual Renta 2023 in the Canary Islands [Deducciones en vivienda]
