Turning Housing Equity into Income in Old Age

Niku Määttänen and Tarmo Valkonen

No 5, ETLA Reports from The Research Institute of the Finnish Economy

Abstract: Abstract Elderly people could markedly increase they standard of living by releasing their housing equity. Purchase of a single-payment life annuity would increase the benefits of this release. The tax treatment of these annuities is, however, very strict in Finland, because both yield and capital are taxed without deductibility of premiums. This study describes the wealth structure of households, assesses the options of taxing single-payment life annuities and analyses how launching of these products would influence tax receipts. We recommend that a rate-of-return allowance should be applied, leaving risk-free interest rate and mortality bonus untaxed. We show that adoption of this tax rule is likely to increase tax revenue, since it would reduce tax-preferred housing.

Keywords: Single-payment life annuity; Equity release; Taxation (search for similar items in EconPapers)
JEL-codes: G22 H24 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2013-02-18
New Economics Papers: this item is included in nep-age
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.etla.fi/wp-content/uploads/ETLA-Raportit-Reports-5.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rif:report:5

Ordering information: This working paper can be ordered from
https://www.etla.fi/ ... /asunnot-elakkeiksi/

Access Statistics for this paper

More papers in ETLA Reports from The Research Institute of the Finnish Economy Contact information at EDIRC.
Bibliographic data for series maintained by Kaija Hyvönen-Rajecki ().