You sell your separately owned home and buy the next one as community property: beware of the reinvestment relief

A person sells their main residence, which they owned exclusively, and uses all the proceeds to buy a new main residence with their spouse.

It may seem logical that, having reinvested all the proceeds in the new home, they can claim the full reinvestment relief for the sale of their former main residence.

That is not necessarily the case.

In its resolution of 13 July 2026, reference 00/05896/2025, the Central Economic-Administrative Tribunal (TEAC) has established a criterion on a very common situation: one spouse sells a home they own separately, and the new home is acquired as community property.

The outcome may have a significant tax cost.

Reinvestment relief for a main residence

Article 38(1) of Spain’s Personal Income Tax Law (LIRPF) allows the capital gain from the sale of a main residence to be exempt where the proceeds are reinvested in another main residence.

If the amount required by the rules is fully reinvested, the gain may be fully exempt. If only part is reinvested, the exemption is proportional.

As a general rule, reinvestment can take place during the two years before or after the sale of the former home. The issue arises when the spouses’ matrimonial property regime also has to be taken into account.

The issue: I sell a home I own alone and we buy the next one together

Suppose someone owns a main residence as separate property because, for example:

• they acquired it before getting married;
• they inherited it;
• it was donated to them; or
• for another reason, it belongs exclusively to them.

They sell it and later use the proceeds to acquire a new main residence with their spouse. The new home is acquired as community property.

The obvious question is: if all the sale proceeds go towards the new home, does the whole amount count as reinvested?

The TEAC’s answer is: not necessarily.

For community property, the tax treatment takes account of the share acquired

The TEAC relies on Article 11 of the LIRPF. For tax purposes, assets and rights are attributed to taxpayers according to the rules governing legal ownership.

Under the Personal Income Tax rules, assets belonging to the marital community are generally attributed equally to each spouse unless a different ownership share is established. This is the key point: if the new home is acquired as community property and no different shares are expressly allocated, each spouse is treated as acquiring 50% for Personal Income Tax purposes.

Therefore, the spouse who sold their separately owned home cannot treat themselves as having acquired 100% of the new home. Their share is 50%.

This can limit the amount treated as reinvested

The TEAC’s criterion is that the taxpayer may claim the exemption by reference to the part of the new home’s purchase price that corresponds to the ownership share they acquired.

It expressly adds that, where a home is acquired as community property without an express allocation of shares, the share is 50% for each spouse. This can produce unexpected results.

An example makes the point clear

Suppose María owned a main residence as her separate property and sells it for €300,000. For simplicity, assume that €300,000 is the amount that must be reinvested for the relief to apply.

María is married under the community-property regime. She and her spouse buy a new main residence for €400,000, acquired as community property. María contributes the €300,000 proceeds from her former home.

It may look as if she has reinvested €300,000. But for tax purposes María acquires only 50% of the new home. Her share of its purchase price is:

€400,000 × 50% = €200,000.

Under the TEAC criterion, the amount María can treat as reinvested is linked to the price attributable to the share she acquired. She cannot automatically count all €300,000 as reinvested simply because she physically contributed that amount. As a result, part of the capital gain on the sale may be taxable for Personal Income Tax purposes.

What matters is not only who provides the money

This is one of the resolution’s most important practical points. These transactions require a distinction between:

• who actually contributes the money; and
• what ownership share the taxpayer acquires in the new home for tax purposes.

For the reinvestment relief, the TEAC gives importance to the second point. It is not enough to show that all the money from the former home was used to pay for the new one. The taxpayer’s ownership share in that new home must also be established.

Does buying as community property mean losing the relief?

No. The TEAC does not say that acquiring the new home as community property prevents the reinvestment relief from applying. It can apply; the amount treated as reinvested must be calculated by reference to the taxpayer’s ownership share.

Where the home is acquired as community property and no different shares are expressly allocated, that share is 50% for each spouse. Depending on the price of the new home and the amount that needs to be reinvested, the relief may therefore be full or partial.

Full relief may still be available

Now suppose the separately owned home is sold for €200,000, and the couple subsequently buys a new home as community property for €500,000.

The taxpayer who sold the former home acquires a 50% share:

€500,000 × 50% = €250,000.

Because the value of that share is €250,000, while the amount to be reinvested is €200,000, the quantitative requirement for full relief may be met, provided all the other legal requirements are satisfied.

Buying as community property does not automatically mean losing half of the relief. The figures of the transaction matter.

A point to consider before signing the purchase deed

This resolution has an immediate practical consequence. If one spouse plans to sell a separately owned main residence and use the proceeds to acquire a new home, the tax treatment should be considered before the purchase is completed, especially where:

• the home being sold belongs exclusively to one spouse;
• there is a substantial capital gain;
• the proceeds will be used to acquire the new home; and
• the new home is intended to be acquired as community property.

The legal form of the acquisition can directly affect Personal Income Tax. A choice that may seem as simple as stating in the deed that the new home is acquired as community property can affect how much of the gain is ultimately exempt.

The TEAC has established a criterion through its unification procedure

This is a particularly significant resolution. It is not simply an answer to an individual tax ruling request. The TEAC resolution of 13 July 2026, reference 00/05896/2025, was issued in an extraordinary appeal to unify criteria.

Its criterion is that, if the other requirements of Article 38(1) of the LIRPF are met, the taxpayer may claim reinvestment relief by reference to the amount used to pay the part of the new home’s price corresponding to the ownership share they acquired.

Where the new home is acquired as community property and no shares are expressly allocated, that share is 50% for each spouse.

Official sources: TEAC resolution 00/05896/2025 and Law 35/2006 on Personal Income Tax.

Conclusion: be careful with an apparently straightforward reinvestment

The TEAC resolution is an important warning for married couples moving home. If you sell a main residence that you owned exclusively and use the proceeds to buy a new home with your spouse, do not assume that all the money you contribute will count as reinvested for tax purposes.

If the new home is acquired as community property, you need to establish what ownership share you acquired. Where no different shares are expressly allocated, that share will generally be 50% for each spouse.

This does not necessarily mean that part of the relief will be lost. If the value corresponding to your 50% share of the new home is enough to cover the amount that must be reinvested, full relief may be available. If it is not, part of the gain from the sale of your former home may be taxable for Personal Income Tax purposes.

The practical conclusion is simple: if one spouse sells a separately owned home and plans to reinvest the proceeds in a new family home, work through the figures before signing the purchase deed.

For the reinvestment relief, it is not only the amount of money you contribute that matters. The ownership share you acquire in the new home matters too.