Posted on: 02nd Jan, 2010 07:52 pm
Some of the expenses associated with a traditional mortgage are sometimes deductible on a federal tax return. Are similar expenses that are incurred for a reverse mortgage also deductible? Also, mortgage interest paid as part of the monthly payment for a traditional mortgage can be deducted if one itemizes his/her deductions. Is there any similar deduction available for the interest associated with a reverse mortgage? I've already asked my "tax professional" and he did not know the answers to these questions. Thanks!
>>are similar expenses that are incurred for a reverse mortgage also deductible?
a reverse mortgage is exactly the same as a traditional forward mortgage as far as fees/taxes are concerned. any deductions your tax person would normally deduct for a forward refinance, can be deducted with a reverse refinance.
>>is there any similar deduction available for the interest associated with a reverse mortgage?
by default, the monthly mortgage payment is deferred, so interest isn't paid to the lender until the loan comes due - which can be a long time. somebody is going to receive a nice interest write-off after the reverse mortgage is paid off.
however, mortgage payments are optional, and if you've made any, you're entitled to the write-off if any portion of the payment was applied towards interest.
a reverse mortgage is exactly the same as a traditional forward mortgage as far as fees/taxes are concerned. any deductions your tax person would normally deduct for a forward refinance, can be deducted with a reverse refinance.
>>is there any similar deduction available for the interest associated with a reverse mortgage?
by default, the monthly mortgage payment is deferred, so interest isn't paid to the lender until the loan comes due - which can be a long time. somebody is going to receive a nice interest write-off after the reverse mortgage is paid off.
however, mortgage payments are optional, and if you've made any, you're entitled to the write-off if any portion of the payment was applied towards interest.
Are closing cost on this type of mortgage tax deductible?
If i make monthly interest & capital payments on my reverse mortgage can i claim interest as deductions on my tax.
If i make monthly interest & capital payments on my reverse mortgage can i claim interest as deductions on my tax.
Yes. Making payments on a Reverse Mortgage are optional, but if you make payments, and they're applied towards the interest, you'll have a tax deduction.
Closing costs are deductible if you paid for them outside of the loan, and only some costs are deductible. You tax consultant will be able to tell you which fees qualify. Personally, I've originated hundreds of Reverse Mortgages and nobody has ever paid any of the fees outside of the loan. They were all financed into the loan.
Closing costs are deductible if you paid for them outside of the loan, and only some costs are deductible. You tax consultant will be able to tell you which fees qualify. Personally, I've originated hundreds of Reverse Mortgages and nobody has ever paid any of the fees outside of the loan. They were all financed into the loan.