Habersham :: Tax Implications Home Page

Tax Implications

Life settlements often carry tax implications. While Habersham Funding, LLC does not offer tax advice, the following information is generally understood as the tax implications of a life settlement. Speak with your legal and financial advisors for a thorough analysis before making any life settlement decision.

Not Taxable – The amount of the settlement that equals your cost basis (the aggregate amount of premiums you have paid into the policy) is not taxable.

Ordinary Income – The amount in excess of your cost basis up to the cash surrender value (the amount you would receive from your insurance company if you were to surrender your policy) is taxed as ordinary income.

Capital Gain – The amount of life settlement greater than the cash surrender value is taxed as capital gain