A Spanish retiree managed to avoid the demand for repayment of 5,538.40 euros that the National Social Security Institute was requesting from him after selling his permanent residence in 2020. The man had been receiving a retirement pension since 2013, plus the minimum complement, an amount granted when the contributory pension does not reach the applicable minimum amount.
The sale of the property generated a capital gain of 28,894.62 euros. The Spanish Social Security considered that this income made the pensioner exceed the 7,638 euro annual limit to maintain the complement and demanded the return of the amount received improperly. The INSS also argued that, to exclude that capital gain from the calculation, the retiree would have to reinvest the money in acquiring a new habitual residence, which did not happen.
The pensioner appealed to the Juzgado de lo Social No. 3 of León, which ruled in his favor, and later to the Superior Court of Justice of Castile and León, where he won again. The court held that, according to Article 33, paragraph 4, of the Personal Income Tax Law, capital gains from the transfer of the habitual residence by people over 65 are exempt from IRPF, the exemption not being dependent on purchasing another house.
The decision was based on the fact that, for the purposes of the minimum complement, income is considered according to the concept provided for in IRPF legislation. Since the capital gain was declared tax-exempt, it could not be accounted for as income for the purposes of the limit applied to the complement, so the sale of the house did not automatically disqualify the retiree from receiving the additional amount he was getting.
