Retirement is a key moment for any worker because it entails important changes. First, he goes from being active at work and receiving a salary to receiving the retirement benefit. But, in addition, this modification of his employment status implies other changes, above all, at the fiscal level with a series of exemptions and discounts.
On the one hand, in 2023 the minimum pension for pensioners aged 65 or over is set at 10,963.40 euros per year and at 13,526.80 in the case of retirees with a dependent spouse. Both below the limit of 22,000 euros per year that marks the obligation to present the Income statement. In addition, according to the latest data from the Social Security for January, the average retirement pension in Spain barely exceeds 19,000 euros.
However, keep in mind that retirees can earn income from other sources. This can be pension plans or rental income. In case of having more than one payer, the limit is set at 15,000 euros. This will also apply the year in which retirement takes place, because the taxpayer will have received other income for a time –salary or unemployment- and, from retirement, the pension.
In any of the above cases, the pensioner will not be required to submit the Income Statement, although sometimes submitting it is beneficial. Pensions for tax purposes are taxed as earned income and are subject to personal income tax withholding. This withholding may be higher than it would be if the deductions or reductions included in the return were not applied. In other words, although it is not mandatory to present it, the declaration can be returned to the taxpayer.
The sale of the house, exempt from personal income tax
In the Income statement, the Tax Agency includes a particular treatment for the sale of a habitual residence by a retired taxpayer. Specific, those over 65 years of age are exempt from the gain obtained whether the habitual residence is transferred in exchange for capital or in exchange for temporary or lifetime rent.
When selling a home with more than one owner, it must be taken into account that the exemption will apply to anyone who is over 65 years of age. That is, if there are two owners and one does not have them compliments, the exemption will only be applied to 50% of the amount.
In addition to a home, the Tax Agency exempts from tax the capital gains obtained from sales made by taxpayers over 65 years of age, provided that the total amount obtained by the transfer is intended to constitute an insured life annuity in your favor. It is a financial savings product through which the holder receives a periodic pension for life in exchange for contributions.
Of course, the life annuity must be constituted within six months from the date of transmission of the patrimonial element; that is, from the sale, and the maximum exempt amount is 240,000 euros. If the reinvestment exceeds this figure, the taxpayer will only have to pay for the difference. In addition, when the amount reinvested in a life annuity is less than the total amount received in the transfer, only the proportional part of the capital gain obtained corresponding to the reinvested amount will be excluded from taxation.
In relation to housing, retirees can also pay a lower rate of Real Estate Tax (IBI). It is a tax that is the responsibility of the Town Halls and, therefore, there is no unanimity. The exempt amount varies, but reaches up to 75% in some municipalities.
