The Directorate General of Taxes confirms that people over 65 can donate their main residence without paying income tax.

The Directorate General of Taxes (DGT), a body under the Ministry of Finance, has confirmed that people over 65 can donate their primary residence to their children without the transaction generating a capital gain subject to Personal Income Tax (IRPF). This interpretation is set out in the binding ruling. V1261-25, dated July 9, 2025, which expressly analyzes the tax treatment of this type of free transfers.

The inquiry concerns a married couple, both over 65, who intend to donate full ownership of their primary residence to their children. The question raised was whether this donation should be subject to income tax (IRPF) on the capital gain arising from the difference between the acquisition value and the transfer value of the property.

In general, personal income tax regulations establish that all donations constitute a change in the composition of the taxpayer's assets and may give rise to a capital gain or loss. However, Article 33.4.b) of the Personal Income Tax Law It includes a specific exemption for capital gains that become apparent on the occasion of the transfer of the main residence by people over 65 years of age.

 

The exemption also applies to donations

In its response, the DGT clarifies that this exemption is not limited to transfers for consideration, such as sales, but also applies to gratuitous transfers, such as donations. In other words, the exemption covers both the transfer of full ownership and the bare ownership of the main residence.

Although a donation technically generates a capital gain or loss, the law exempts gains derived from the transfer of a primary residence when the transferor is over 65 years of age. Consequently, this gain is not included in the taxable income for Personal Income Tax (IRPF) purposes and is not subject to this tax.

 

Tax implications for children

The DGT (Spanish Directorate General of Taxes) emphasizes, however, that this exemption only affects the donor's personal income tax (IRPF). The children who receive the property will have to pay income tax on it. Inheritance and Gift Tax (ISD), in accordance with the regional regulations applicable in each case.

Therefore, although the donation may not impact the parents' personal income tax, it may have relevant tax consequences for the beneficiaries, making a prior analysis of the transaction advisable.

 

What is meant by main residence

The consultation also reiterates the requirements for a property to be considered a primary residence for tax purposes. Generally, it must have been the taxpayer's residence for a continuous period of at least three years, as provided for in the Personal Income Tax Regulations.

Furthermore, this requirement is considered fulfilled when the dwelling has had the status of habitual residence on any day of the two years prior at the date of the transfer, even if the taxpayer no longer resides there at the time of the donation. This aspect is especially relevant in cases of prior relocation to another dwelling or to an assisted living facility.

In short, the doctrine of the Directorate General of Taxes reinforces legal certainty in the asset planning of people over 65 years of age, confirming that the donation of the main residence can be made without tax cost in the Personal Income Tax, provided that the established legal requirements are met.