It is commonly assumed that non-residents cannot apply the reinvestment exemption for a primary residence. However, this is not always correct.
Additional Provision 7 of the Spanish Personal Income Tax Law allows the capital gain from the sale of a former primary residence in Spain to be exempt, even after the taxpayer has become a non-resident, provided the proceeds are reinvested in a new primary residence.
To apply the exemption:
The taxpayer must have been a Spanish tax resident prior to the sale.
Both properties must qualify as primary residences under IRPF rules.
Legal reinvestment deadlines must be met.
The new primary residence does not need to be located in Spain, as confirmed by recent binding rulings.
This exemption does not apply to taxpayers under the Beckham Law regime.
Due to its complexity, this provision should be analysed carefully on a case-by-case basis.