I am looking into releasing equity from my home and want to know if the money received from an equity release scheme is taxed?
No: Currently the money released by way of an equity release scheme taken out on your principal residence would be free of both Capital Gains Tax and Income Tax. However, any interest earned or growth received from any lump sum deposited or invested would be potentially liable to tax. That's one of the reasons why its normally poor advice to take out more money than you need to achieve your immediate goals.
A drawdown lifetime mortgage allows you to create a maximum facility but only take what you need now (subject to plan minimums) and leave the balance to drawdown over a period of time. Further drawdowns can normally be taken as often as you like and from as small an amount as £2,000 a time, until you have used up all your facility. This way you only incur interest on the amount actually taken and not the facility, helping you to preserve more equity in your property for later use or to leave as an inheritance, and helps avoid you paying tax on any money released.
To discover more about drawdown lifetime mortgages and look at their advantages and disadvantages visit drawdown lifetime mortgages.
Similar benefits can be obtained by doing a partial home reversion plan.
If you would like to discuss drawdown lifetime plans or partial home reversion plans further, please call us now on 0800 970 4883.