The amounts received from a lifetime mortgage are not subject to income tax and therefore are not taxable.
However, if a lifetime mortgage involves obtaining an income insurance policy, the monthly payments received as benefits in this case are subject to taxation.
In the illustration, we provide you with details on whether the available options include this insurance and the taxation implications associated with it.
Immediate life annuities are treated as income from movable capital and are subject to taxation. For individuals over 70 years old, 8% of the annuity amount is taxable. This means that for a monthly installment of €1,000, the client would be taxed at a rate of 19% on the 8% yield. The calculation would be 19% x 8% x €1,000 = €15.2. Therefore, the client would receive a net amount of €984.8.