Has anybody had any experience with a reverse mortgage? I have an older couple as clients that want to do this as they need the cash and don't plan to move. I know there would no longer be any mortgage interest to deduct but would the income they receive monthly or yearly be fully taxable. I'm not sure how this would be reported to them. Any help would be appreciated.
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Bill -
Reverse Mortgages
For people 62 and older are nontaxable income. The interest on these mortgages are deductible as mortgage interest. The couple would rely on statements provided by the financial institution they use. Google reverse mortgages taxabiliity. All kinds of information available on the Internet. -
I have a client new to selling these things and as I understand it there is no deduction for the interest as the taxpayer has not paid any interest and is only receiving tax-free equity from their home. I don't know for sure this is true as I have not actually seen any paperwork for tax preparation with a client.Originally posted by ChiefComment
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The client has nothing to report.Instead of selling his personal residence he is taking the equity. Some where down the road when he is gone the residence is sold and his heirs will receive the balance of the equity that is left on the houseOriginally posted by B C
On the equity that he receives he is paying interest at what ever rate has been decided at closing.
It's a great tool for senior citizens without sufficient income to live the way they have been accustomed to.BrianComment
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Its my understanding the mortgage companies are not reporting interest paid on a 1098. Has anyone seen such?Originally posted by DeltaxComment
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No, I have never seen a 1098 from any mortgage companies. The fact is that these folks who opt for the reverse mtg do not file tax returns and therefore do not even care for the 1098Originally posted by OldJackBrianComment
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