Ending an annuity
Hello Terry,
You’re the only one I trust to ask about ending my Annuity. I don’t trust the financial planner who sold it to me at all.
I opened an annuity back in August 26, 2019, investing $75,879.16 in a Polaris Platinum III Variable Annuity. As of March 31, 2026 it shows a market value increase of $30,207.32. It’s still in the accumulation phase, and will fully Annuitize on August 26, 2026, so I can begin taking withdrawals. If I had taken the $75,000 funds and put it in a fixed 5% CD it would have grown to $95,721. But after their monthly “Living Benefit Fees” the current Account Value is just $90,537 (something I was never told about when I opened the account).
I plan to use the money to replace some windows in my condo, put some money down on a car, and possibly pay down a chunk of my mortgage. The mortgage is at a 1.9% rate, so I hate to pay that off, but I’m paying $116 in interest on that loan every month, and I’d like to eliminate that.
My question to you is whether the improvements to my home, and mortgage payment are tax deductable? And what else can I do with this money to reduce my Capital Gains tax at the end of the year. I don’t know if I can close it out and take the full account value now, or if I have to take monthly $615.94 payments , with the balance going to my sons upon my passing.
Your thoughts?
Terry Says
Whoa! There’s an awful lot you don’t know — not only about annuities, but about capital gains and taxes on your condo.
Let’s start with the annuity. There could definitely be income tax consequences to withdrawing the money. And that could impact your Medicare Part B premiums, assuming you are on Medicare. Second, you misunderstand the term “fully annuitize” — which isn’t even a thing. It might mean that you are past the penalty period for withdrawals. I can’t opine without seeing the actual terms of the product you bought.
But you’re right about one thing: Don’t ask the person who sold it to you!! Instead contact Stan Haithcock (www.StantheAnnuityMan.com) and show him the documentation. He can give you trusted advice about your options. You can set up an appointment on his website, and be sure to have all your annuity documents in front of you for the conversation.
Now, totally separately, let’s talk about your condo. Definitely do NOT touch that 1.9% mortgage. There is absolutely no sense in paying down the balance.
If you want to buy a new car or change out your windows, you’ll have to find the money elsewhere. Maybe it can come from using some of this annuity money — after you pay taxes on the withdrawal. Again, you’ll need to know the tax impact of withdrawals — and how the extra income will impact your Medicare premiums.
You do NOT pay capital gains taxes on a property until you sell it! It has nothing to do with the “end of the year”! If you do make improvements, you’ll want to keep records of the amounts, as it will reduce your gains tax on sale. But since you can exclude $250,000 of capital gains on the sale of your primary residence, this probably won’t be a big impact.
And also, it comes to mind that you should deal with your condo association if your windows need replacing. Typically that is done for the entire building at a substantial discount. in fact, you may be precluded from changing out your windows. And doing it on a single-apartment basis invites another opportunity to be ripped off (much as you likely were with the annuity purchase).
Finally, it strikes me — knowing nothing more than what’s in your question– that you might benefit from some overall advice from a FIDUCIARY fee-only financial planner you can trust. Please watch the video at this link: https://www.terrysavage.com/pam-krueger-wealthramp/
