Transfer of assets by persons over 65 years of age with reinvestment in life annuities

Regulations: Art. 38.3 and Ninth Additional Provision Law IRPF ; art. 42 Regulation Income Tax

Capital gains derived from the transfer by persons over 65 years of age of assets are exempt, provided that the total amount obtained is used within six months to create an insured life annuity in their favor.

The maximum total amount that a taxpayer may allocate to establish life annuities will be 240,000 euros. 

When the reinvested amount is lower than the total of the amount received in the transfer, only the proportional part of the capital gain obtained corresponding to the reinvested amount will be excluded from taxation.

Failure to comply with the conditions of reinvestment or anticipation, in whole or in part, of the economic rights derived from the established life annuity will result in the corresponding capital gain being subject to taxation.

Requirements of the insured annuity

1. The life annuity contract must be signed between the taxpayer , who will be the beneficiary, and an insurance company .

2. The life annuity must have a periodicity of less than or equal to one year , must begin to be received within one year from its establishment, and the annual amount of the income may not decrease by more than 5% compared to the previous year.

3. The taxpayer must inform the insurance company that the life annuity being contracted constitutes the reinvestment of the amount obtained from the transfer of assets, for the purposes of applying this exemption.

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