Sale with guaranteed rent and IRPF: exemption for over-65s

What is subject to IRPF upon selling

In principle, the sale generates a capital gain or loss: the transfer value minus the acquisition value (plus any deductible expenses permitted by regulations). This gain forms part of the savings tax base and is taxed according to the rates applicable in the tax year of the sale.

In parallel, the local council may levy municipal plusvalía (IIVTNU) on the increase in land value, unless non-subjectivity or tax relief applies. IRPF and municipal plusvalía are separate tax layers: exempting one does not automatically exempt the other.

Exemption for over-65s (Art. 33.4.b LIRPF)

IRPF exempts the gain made by taxpayers aged 65 or over who transfer their primary residence. AEAT elaborates on the concept of primary residence in its guides and manuals (period of occupation, town hall registration, centre of vital interests).

In a sale with guaranteed rent:

• You transfer full ownership at the moment the public title deed is signed.
• Immediately afterwards (or in the same coordinated transaction), you sign a tenancy agreement with the buyer.
• You continue living in the property, but as a tenant, not as an owner.

When applicable, the exemption is assessed at the moment of the transfer of ownership, rather than on the basis of the subsequent lease. The critical factor is demonstrating that the flat was your primary residence and that you meet the age and other requirements on the date of sale.

Difference from bare ownership

When selling bare ownership (nuda propiedad) while retaining a life usufruct, you retain an in rem right of use. In a sale with guaranteed rent, you give up ownership and retain tenant rights. The exemption under Article 33.4.b is designed for the sale of a primary residence; administrative doctrine specifically addresses sales retaining a usufruct. In a guaranteed rent transaction, you do not retain a usufruct: you sell full ownership.

This alone does not prevent the exemption, but it changes the analysis of primary residence status and documentary evidence. Do not apply conclusions from an article on bare ownership without adapting them to a full sale.

What the article does not exempt

• The rent payments you make afterwards as a tenant (these are living expenses, not a capital gain from the sale).
• Transfers of properties other than your primary residence.
• Cases where ownership was already split between a bare owner and a usufructuary (a different rule applies compared to a sole owner selling while retaining a usufruct).

If you sell a second home or a flat that does not meet the primary residence definition, the exemption does not apply even if you are over 65.

Documentation and proof of primary residence

Before signing, it is advisable to gather:

1. Town hall registration (empadronamiento) and occupancy history.
2. Utility bills in your name at the property address.
3. Title deeds and acquisition details to calculate capital gain.
4. An indicative municipal plusvalía report.

The notary and the buyer do not validate your IRPF return: you report it in your tax return for the relevant financial year using the correct criteria or with professional guidance.

Reference value and buyer taxes

The buyer will pay ITP/AJD depending on their autonomous community, based on the higher of the agreed price and the Cadastral reference value (Law 11/2021, Art. 10 TRLITPAJD). This is not your IRPF, but it influences whether the investor accepts the price and whether the deal closes.

Planning before selling and renting back

Practical questions:

• Would the capital gain be exempt in my specific case?
• What municipal plusvalía does the local council expect?
• Does the agreed rent fit into my long-term budget?
• What happens if the tenancy terminates or is reviewed according to the contract?

The tax on the sale is a one-off event; the rent is an ongoing monthly payment. It is advisable to model both scenarios.

Common mistakes

• Assuming that "I still live here" is sufficient without proving primary residence status at the time of sale.
• Confusing the IRPF exemption with the municipal plusvalía exemption.
• Delaying professional advice until after the title deed is signed.
• Signing a tenancy agreement without reading clauses on duration, rent review, and property maintenance/repairs.

Alternatives and comparison

If your priority is liquidity without forfeiting an in rem right of use, bare ownership (nuda propiedad) is another legal and tax option. You can read the comparison between guaranteed rent and bare ownership or the article on taxes when selling bare ownership.

To explore a sale with guaranteed rent in the areas where we operate, your starting point is sale with guaranteed rent. Each transaction is reviewed with commercial diligence and, when required, with support from Sky Law for both the sale and the tenancy agreement.