Joaquín Bermejo, a translator who works from home, sold his flat on Avenida de España, in Cáceres, in March 2026. He obtained 180,000 €, with no mortgage outstanding, and a gain of 64,000 €. Two months earlier he had bought a 1940s stone house in Trujillo, a small town in the same province, for 110,000 €, plus 8,000 € of costs, intending to live there. The house needs a new roof, reinforcement of the timber floor structures and the back façade rebuilt: the estimate for the structural work is 70,000 €. Separately, he wants a new kitchen costing 15,000 €. His question is whether he can count the work as reinvestment, since the price of the house does not reach the 180,000 € he obtained.
What the Regulations treat as equivalent to buying
Article 41.1 of the Regulations on IRPF (Spanish personal income tax), after defining the exemption, adds: "renovation of a home is treated as equivalent to its acquisition". Not all work is renovation. The same provision requires the work to meet one of these two requirements:
- Letter a): that it consists of subsidised housing renovation measures under Royal Decree 233/2013, which regulated the State Housing Plan 2013-2016.
- Letter b): that its main purpose is to reconstruct the home by consolidating and treating structures, façades or roofs and other similar elements, provided that the overall cost of the work exceeds 25 % of the purchase price, if the home was bought in the two years before the work began, or otherwise of the market value at the time it begins. In both cases the part corresponding to the land is deducted.
Letter a) still refers to a state plan that has already ended. If work is subsidised under a later plan, its fit under that letter is not automatic, and the prudent course is to check whether it also meets letter b), which does not depend on any subsidy.
Renovating and refurbishing are not the same
Letter b) looks at two things: the nature of the work and its cost. The nature requires the main purpose to be reconstruction by treating the elements that hold up or enclose the building. The cost requires the 25 % threshold to be exceeded. Very expensive work that only renews finishes does not pass the first test; small structural work does not pass the second.
| Work | Is it renovation in the sense of art. 41.1? |
|---|---|
| New roof replacing the structure | Fits the nature required; the threshold remains to be checked |
| Reinforcing or replacing floor structures and beams | Fits the nature required |
| Consolidating foundations or load-bearing walls | Fits the nature required |
| Rebuilding a deteriorated façade | Fits the nature required |
| New kitchen or bathrooms | Refurbishment; on its own it does not fit |
| Replacing floors, doors and windows, painting | Refurbishment; does not fit |
| New electricity and water installations | Doubtful if it goes with structural work; on its own, no |
| Work subsidised under Royal Decree 233/2013 | Letter a) |
When a structural renovation includes finishing items within the same project, it can be argued that they form part of the "overall cost of the renovation work". We do not take it for granted: in the files we prepare we separate each item so that the structural figure stands up on its own.
The 25 % threshold in Joaquín's case
Joaquín bought in January 2026 and will start the work before January 2028, so the base is the purchase price and not the market value.
- Purchase price of the house in Trujillo: 110,000 €.
- The land's share: let us assume that the IBI bill (the annual municipal property tax) attributes 35 % of the valor catastral (the official land registry value) to the land. Applying that proportion, the land comes to 38,500 €.
- Price without land: 110,000 − 38,500 = 71,500 €.
- 25 % threshold: 71,500 × 25 % = 17,875 €.
- Cost of the structural work: 70,000 €. It comfortably exceeds the threshold.
The split between land and building can be made using other criteria, but the cadastral proportion is the most widely used and the easiest to document; it is explained in the guide on the land value on the IBI bill. The kitchen, on the other hand, we leave out of the calculation.
How much Joaquín has reinvested
| Item | Amount | Does it count? |
|---|---|---|
| Price of the house in Trujillo | 110,000 € | Yes, acquisition within the two years before the sale |
| Purchase costs | 8,000 € | In principle, as part of the acquisition value |
| Structural work paid within the time limit | 70,000 € | Yes, if it is proved to be renovation |
| New kitchen | 15,000 € | We do not count it |
| Total that counts | 188,000 € | Exceeds the 180,000 € obtained |
If everything is proved, the 64,000 € gain is fully exempt. Without the work, Joaquín would only have reinvested 118,000 €, and the exempt part would be 64,000 × 118,000 ÷ 180,000 = 41,955.56 €, with 22,044.44 € subject to tax. The work is therefore worth more than 22,000 € of taxable base, which is why it deserves to be well prepared.
There is an added detail of timing. The house was bought before the sale, so the price paid in January only counts if what was obtained on the sale was used to pay it, as we explain in I bought the new home before selling the old one. The building invoices Joaquín pays after March 2026 with the sale money fit more naturally, provided he pays them before two years have passed since the sale.
What counts as reinvestment is what is paid to the builder within the two years following the sale. A building contract signed in time, with stage payments made afterwards, leaves out the part paid late. If the work drags on, it is worth adjusting the payment schedule to the tax deadline and not just to the pace of construction.
What evidence we ask for
For a structural renovation we need the technical project or the architect's report describing the work, the building licence or the town hall's equivalent authorisation, the estimate broken down by item, the invoices with proof of payment, the certificate of completion of the work and the IBI bill with the cadastral value of the land and of the building. If there was a subsidy, the decision granting it and its legal basis.
You can send us that paperwork, even if it is incomplete, through the reinvestment form. With the itemised estimate it is already possible to estimate whether the work exceeds the threshold before it starts.
Moving in after the work
The renovated home has to become the main home. Article 41 bis.2 of the Regulations requires it to be effectively lived in within twelve months of the acquisition or of the completion of the work. When the house is not habitable until the renovation is finished, it is advisable for the date on the certificate of completion and the date of the move to be well documented, because the count depends on them. And after that, three years of residence, as we set out in what exactly "main home" means.
Work carried out on the home being sold is another matter: it is not reinvestment, but it may increase its acquisition value and reduce the gain. That distinction is covered in the guide on improvement or repair when selling.
Whether a renovation fits the exemption, with the calculation of the threshold and the payment schedule, is studied as part of the Salama Tax service for selling your main home.