I have a client that took a reverse mortgage last year. She was charged $1500 loan origination fee. Is this deductible for a reverse mortgage?
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Did she pay it out of pocket or was it added to the loan? If it was paid out of the proceeds of the reverse mortgage it would not be deductible. Loan origination fees in general are only deductible on the purchase of a primary residence. If on a refi then the fee is amortized over the life of the loan.In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.
Alexis de Tocqueville -
By the way. Does anyone know if mortgage companies can ask for an immediate payback of a mortgage if they are in trouble? Or is this covered under some kind back up plan by an insurance or the government?Comment
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I need to check
whether it was paid out of the loan or she had to pay up-front. If she did pay, over what period of time would it be amortized? Her loan remains active as long as she continues to live in the home.Comment
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From Pub. 17
Reverse mortgages. A reverse mortgage is a
loan where the lender pays you (in a lump sum,
a monthly advance, a line of credit, or a combi-
nation of all three) while you continue to live in
your home. With a reverse mortgage, you retain
title to your home. Depending on the plan, your
reverse mortgage becomes due with interest
when you move, sell your home, reach the end
of a pre-selected loan period, or die. Because
reverse mortgages are considered loan advances
and not income, the amount you receive
is not taxable. Any interest (including original
issue discount) accrued on a reverse mortgage
is not deductible until the loan is paid in full. Your
deduction may be limited because a reverse
mortgage loan generally is subject to the limit on
Home Equity Debt discussed in Publication 936.Comment
Comment