If you have sold property acquired before 31 December 1994, you can take advantage of a partial or total exemption from the profit in your personal income tax.  But there are some limits. See how to do it to adjust your tax bill and not pay more. Example with figures.

Personal income tax: correctly declare the profits from property acquired before 31/12/1994

In principle, when you have transferred a property, you must declare the capital gain obtained from the transfer in your personal income tax. It is calculated with this operation: transfer value – acquisition value. However, the personal income tax regulations contemplate some partially exempt profits as inheritance from previous regulations. At a given time there was a change in the regulations in the personal income tax and the Law included a kind of acquired right for situations that occurred on certain dates. Let’s look at these two special cases:
The profits obtained from selling an urban property purchased between these dates: 12 May and 31 December 2012, both inclusive. In this case, the gain is declared reduced by 50%, unless the gain is sold to a spouse or a blood relative or a relative by marriage up to the second degree, or to an entity linked to them.

The gain obtained from the transfer of assets acquired before December 31, 1994 benefits from reduction coefficients, which are applied only to the proportionally accumulated part up to January 19, 2006, inclusive. The rest is taxed. The longer you wait to transfer them, the smaller the part of the gain that can benefit from the reduction coefficients. Therefore, if you intend to sell an asset of this type, do so as soon as possible. In the case of assets from before 1994, there is a limit: only profits generated by sales with a total value of 400,000 euros, made after 1 January 2015, benefit from the reduction. For example, if in 2015 you sold a flat for 350,000 euros at a profit and in 2022 shares for 100,000 euros, you cannot apply the reduction coefficients to everything; 50,000 euros would be taxed at 100%. Let’s see how it works. The attached table shows how transferred properties are taxed, depending on the date of acquisition.

Date of purchase of the property Percentage taxed, %

How to apply the exemption 

As there is a limit of 400,000 euros of sales to which this partial exemption can be applied, if you have made several sales of goods prior to 1994, in the declaration you must indicate which ones you want to apply this benefit to until you exhaust the limit of 400,000 euros.

Now, you have to convert the pesetas into euros and the Tax Agency gives us the number to do so, like the Greek Pi for mathematicians, and it is 166.386, therefore X pesetas / 166.386 and we will know how much our property was purchased for, the rest is IRPF.

Davide Rigoni CEO InversionesBCN