Knowing the tax benefits available to those over 65 is essential for optimising your annual tax return. At Óptima Mayores, we explain the main exemptions you can benefit from, especially those related to your property and equity release plans.
100% Exemption on the sale of a primary residence
One of the most significant tax advantages for seniors in Spain is the exemption from capital gains tax on the sale of their main home.
- Who benefits? People over 65.
- What is exempt? The entire capital gain obtained from the sale of the property.
- Does it apply to Home Reversion? Yes. When you opt for a home reversion plan, the sale of the legal title of your primary residence is fully exempt from tax.
Exemption for reinvestment in a Life Annuity
If a person over 65 sells any other type of asset (a second home, shares, etc.), they can also avoid paying tax on the gain if they use the money to set up a home reversion annuity plan or a standard life annuity.
- Limit: The maximum amount that can be reinvested to benefit from this exemption is €240,000.
- Deadline: The annuity must be contracted within six months of the sale.
Tax treatment of the Lifetime Mortgage
The lifetime mortgage is particularly attractive from a tax perspective because of how the funds are perceived:
- Tax-free liquidity: The amounts received through a lifetime mortgage are considered loan dispositions, not income. Therefore, they are not subject to Personal Income Tax (IRPF).
- Exemption from IAJD: In Spain, these operations are exempt from Documented Legal Acts tax (IAJD), significantly reducing the initial setup costs.
Benefits for House-to-House moves and Dependency
There are also specific deductions for those who need to adapt their homes due to disability or dependency. Furthermore, some local authorities offer reductions in Property Tax (IBI) for seniors with lower incomes or specific family situations.
Why expert advice is vital
Tax laws can be complex and are subject to change. Before making a decision regarding a sale & leaseback or any other form of property monetisation, it is crucial to have a professional tax study.
At Óptima Mayores, we ensure that you not only find the best financial solution but also take full advantage of all available tax exemptions.
Contact our team today for a free, personalised consultation on your tax and financial options.
