A building in the Villaverde district in the south of Madrid has been earmarked to house the retirement home, which will be funded by public money from Madrid's regional government.
The new centre will be home to 66 permanent residents and will have a day centre for a further 30 people.
Federico Armenteros has been working for almost a decade to set up a specialized residence for elderly gay people through the December 26th Foundation – named after the date in 1979 when the law used during Gen Franco's dictatorship to imprison homosexuals – was repealed.
Now in his 70s, Armenteros founded the project based on his own experience in a residential home for the elderly, after he was ostracised by other residents for being gay.
“They started to steer clear of me and insult me,” he said in an interview in 2011 when he first launched his project.
“They called me 'queer' and it made me feel awful. My room has two beds but no-one wants to share with me. So I'm alone and it's bad.
“I have to make myself as invisible as possible – go back in the closet – so they don't notice me. And I spend as much time outside the home as possible.”
Eight years after he first began the campaign for a dedicated residential centre for gay people, the project is coming to fruition.
“There are some people who are now 80-years-old and have never experienced the freedom of the LGTB movement because it didn’t exist until 2005, when same-sex marriage law saw homosexuality removed from the criminal code,” Armenteros told EFE earlier this month.
“Something had to be done so that these people could live out their last moments with as much dignity as possible,” he said.
Data shows that there are an estimated 160,000 people over 65 who describe themselves as LGBT and want to live out their lives “in a place of respect”.
Although the centre will be funded by the regional government of Madrid, it will be managed by the December 26th Foundation.
He claims this will be the first publically funded geriatric centre for the LGBT community in the world.
Spain has been a pioneer of gay rights, becoming one of the first European countries to grant equal marriage and adoption rights to same-sex couples in 2005.
It consistently scores high on the Rainbow Europe report, for its protections for and rights granted to lesbian, gay, bisexual and transgender people (LGBT).