No. The Spanish Supreme Court has confirmed that a spouse who had to leave the family home because of a separation, divorce or annulment can still apply the reinvestment exemption on their share when selling, even if more than two years have passed since they moved out, as long as their former spouse keeps living in that home.
What exactly did the Supreme Court rule?
The Supreme Court's Administrative Chamber, in ruling 646/2026 of 27 May, reaffirms doctrine it had already set in 2023: the requirement of actually occupying the habitual residence — needed to avoid tax on the gain when the proceeds are reinvested in a new home — is considered met if, after the breakup, the other spouse keeps living there. The Court reasons that article 41 bis.3 of the Personal Income Tax Regulation cannot be read in isolation, but together with the rules the same regulation sets for separation, divorce or annulment cases.
The Court adds an equality argument, based on article 14 of the Spanish Constitution: denying the exemption to the spouse forced to leave because of the breakup would give them worse tax treatment than the one who stayed living there, even though neither of them freely chose that situation.
The case behind the ruling: three years away from home
The couple bought the home in 2002. In May 2012, the divorce ruling gave use of it to the wife and their three children for up to three years, and the husband moved out on 18 June that year. The co-ownership ended on 9 June 2015: the home was valued at €210,000 and he received €105,000 for his half. Twenty days later he reinvested that full amount in his new habitual residence.
| Date | Event |
|---|---|
| 2002 | Purchase of the home |
| May 2012 | Divorce ruling: use of the home awarded to the wife and children |
| 18 June 2012 | The husband moves out |
| 9 June 2015 | Co-ownership ends: he receives €105,000 for his 50% share |
| 25 July 2015 | He reinvests the full amount in his new habitual residence |
What does the law require to avoid tax on the gain when you reinvest?
Article 38.1 of the Personal Income Tax Law excludes from taxation the gain made when selling a habitual residence, as long as the amount is reinvested in another habitual residence. If the reinvestment is only partial, the exemption applies proportionally. The Regulation, in article 41 bis.3, also requires that the home sold was the habitual residence at the time of sale, or had been so at some point during the previous two years.
The case the Supreme Court resolved fit that rule awkwardly: the husband had been away for almost three years when the sale took place. The Court ruled that, in cases of separation, divorce or annulment, that two-year window does not apply the same way when the other spouse has kept living in the home without interruption. In fact, Royal Decree-Law 29/2026 of 6 October has already amended the wording of article 41 bis.3 to spell out this criterion.
What this means if you're selling a home on the Costa del Sol after a divorce
Among the foreign owners who buy in Marbella, Málaga, Mijas or Fuengirola, it's not unusual for a separation or divorce to force one spouse to move out while the other keeps living in the family home for months or even years, sometimes under a court order, sometimes by an informal arrangement. This ruling is good news for the one who left: they don't automatically lose the right to avoid tax on the gain when they eventually sell their share and reinvest in a new habitual residence.
In practice, it's worth keeping evidence that the former spouse kept living in the home (residency registration, utility bills, the divorce ruling itself) and that the reinvestment was made within the legal deadline. If you're selling after a breakup, the safest approach is to review your case with a tax adviser before signing, since applying this doctrine depends on all the specific circumstances being met.
In summary
If you had to leave your habitual residence because of a separation or divorce and your former spouse kept living there, the Supreme Court backs you keeping the reinvestment exemption when you sell your share, even if several years have passed. If you're considering selling a property on the Costa del Sol after a breakup, at EVS Property we can help you understand its current value and prepare the sale with the right tax safeguards.
Frequently asked questions
What is the reinvestment exemption for a habitual residence?
It's the tax benefit under article 38.1 of the Personal Income Tax Law that excludes from taxation the gain made when you sell your habitual residence, as long as you reinvest the amount in buying another habitual residence.
How long do I have to reinvest the sale proceeds?
The general rule requires reinvesting within two years, either before or after the sale. In separation or divorce cases with a court ruling, that window can be counted differently than usual, so it's worth checking with an adviser.
What happens if I only reinvest part of the money?
The exemption applies proportionally to the part you reinvest. The rest of the gain is taxed as a normal capital gain.
What if my former spouse also moved out?
The Supreme Court's doctrine relies on one of the two spouses continuing to live in the home. If neither of them kept living there, the general two-year criterion would apply without this exception, unless other circumstances justify it.
Can I apply this exemption if I no longer live in Spain?
The reinvestment exemption is designed for Personal Income Tax (resident) taxpayers. If you become a non-resident, the tax regime for the sale changes, and it's worth reviewing your case together with the double-taxation treaty of your country of residence.
