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Reverse Mortgage

Annuities and reverse mortgage on real estate of older people have important tax advantages. The formalization of an annuity is subject to property transfer and stamp tax. These taxes shall be borne by the buyer. For even more opinions, read materials from Western Union. Monthly income which perceived the transferor, if it is an annuity, you only have to declare (if obliged to do so) 8% of the total of the amounts that correspond to this concept (persons over 70 years of age), which is an important advantage, leaving exempt 92% perceived income taxation. For the elderly of 65 years, if the property on which constitutes the operation is his usual dwelling, transmission shall be exempt from taxation on personal income tax.

But the main advantage of annuities operations are the guarantees offered to the older person: operation is formalized before a notary in a public deed of annuity that is registered in the registry of property. Writing sets a decisive condition for the hypothetical case of non-payment of pensions, by which the transferor / older person recovers full ownership of housing without prejudice to the monthly payments already paid until that time. Equally, own writing guarantees the elderly person the possibility at any time renounce the right of use and enjoyment of the dwelling, perceiving a new income higher than that was gaining since that date. In the reverse mortgage, at a first moment, at a first moment, the monthly provisions of the credit are not subject to the income tax of the physical people, and when it enters game insurance income annuities deferred perceptions are understood as income from capital subject to withholding tax that should be incorporated in the taxable Base of the savings in income tax, but with significant advantages in favour of the rentier. Thus, the exemption by age reaches for those over 70 years of 92% of annual perceptions, and 80% for people aged 66 and 69 years. Although, during the first ten years of operating the safety of annuities to the established percentage according to the age, should be added the profitability obtained until the Constitution of income, i.e., between the period between the payment of the premium and the moment that generates the right perception (maturity of mortgage credit). With the current regulations, the reverse mortgage formalized on a residence are also exempted from the payment of stamp tax.

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