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V1300-16 30 March 2016 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del capital mobiliario

Life insurance payouts for mortgage cancellation are taxed as income from movable capital

The tax treatment of life insurance benefits covering disability and intended for the settlement of mortgage loans has been reviewed. The Directorate General for Taxes (DGT) has determined that these benefits are taxed as income from movable capital and must be attributed to the period in which they become due.

The question raised

Taxation under Personal Income Tax of the aforementioned benefit, for both the applicant and the spouse. Temporal attribution.

The DGT's ruling

Life insurance proceeds received by the mortgage creditor to amortize the debt are treated in the same manner as if the beneficiary were the taxpayer themselves. These benefits are considered income from movable capital, calculated as the difference between the capital received and the premiums paid. They are attributed to the tax period in which the benefit becomes due to the beneficiary following the contingency and communication of the loss. The spouse does not obtain income if the yields are attributed to the ownership of the applicant.

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