topic Re: Is reverse mortgage interest deductible in After you file

Is reverse mortgage interest deductible

acb27 — Tue, 04 Jun 2019 19:29:16 GMT

It is not - unless you paid off the loan in full. Any int...

MargaretL — Tue, 04 Jun 2019 19:29:17 GMT

It is not - unless you paid off the loan in full.

Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until you actually pay it, which is usually when you pay off the loan in full. Your deduction may be limited because a reverse mortgage loan generally is subject to the limit on Home Equity Debt.

However, for reverse mortgages, you can deduct amounts you paid for qualified mortgage insurance. The insurance must be in connection with home acquisition debt- the deduction is not available for the portion relating to other types of indebtedness, such as home equity indebtedness. Also, the insurance contract must have issued after 2006.

For more information, please refer to IRS publication 936, page 8.

It is still not clear to me that any of the Mortgage Inte...

robertballou2622 — Tue, 04 Jun 2019 19:29:19 GMT

It is still not clear to me that any of the Mortgage Interest or MIP I accrued on my reverse mortage is deductible now that I've sold my house. I received a Form 1098 from the lender showing the total amount of interest received from the payer in Box #1 and MIP premiums in Box #5. If any of this is deductible, how many years can I spread this deduction out?

I'm still waiting for an answer to my question about numb...

robertballou2622 — Tue, 04 Jun 2019 19:29:20 GMT

I'm still waiting for an answer to my question about number of years this significant amount (over $16,450) can be carried forward, and I would like to know what is meant by "home equity indebtedness."Seems like over $90,500 in interest deduction is a lot to kiss goodbye.

I have the same question. is there some guidance that ca...

nlarsonaz — Tue, 04 Jun 2019 19:29:22 GMT

I have the same question. is there some guidance that can be given? walking through TT there is no mention of where to enter the interest and/or MIP for a Reverse Mortgage - only a HELC or regular mortgage. This should be addressed in TT due to the number of Reverse mortgages and the potential of payoff and sale of a home that has a Reverse mortgage

Re: Is reverse mortgage interest deductible

Anonymous — Thu, 18 Jul 2019 19:36:24 GMT

The relevant IRS Publication is 936. Page 5 reads to me as a "no" - not deductible

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 combination 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 isn't taxable. Any interest (including original issue discount) accrued on a reverse mortgage is considered home equity debt and isn’t deductible.

Re: Is reverse mortgage interest deductible

NewRicky — Tue, 24 Dec 2019 12:55:09 GMT

What if the reverse mortgage is for purchase of new home and one pays the interest on the reverse mortgage on a monthly basis? Would this be considered payment acquisition debt and therefore be considered tax deductible? My guess is that the mortgage company would have to issue a 1098 for interest paid in that year, and that it would be tax deductible for up to a limit of $750k over the lifetime of the loan, right?

Re: Is reverse mortgage interest deductible

Critter — Tue, 24 Dec 2019 13:20:20 GMT

Are you sure you have a reverse mortgage and not an Equity Loan (HELOC) ? Normally there are no payments due on a reverse mortgage.

Reverse mortgages are paid off in single payments, not in installments, when they're due. Your reverse mortgage lender doesn't expect its loan to be paid off until you actually do move out of or sell your home, or die.

Can a Relative Pay Off a Reverse Mortgage? | Home Guides ...

https://homeguides.sfgate.com › can-relative-pay-off-reverse-mortgage-58543

Re: Is reverse mortgage interest deductible

NewRicky — Tue, 24 Dec 2019 15:39:36 GMT

Yes my loan is a reverse mortgage, but I am going to voluntarily pay the interest each month to keep the loan balance from growing. However, because they are voluntary payments, I can stop paying them when I want ie. if we have a decrease in income due to illness or death of one of us. Also, because the payments will add to a line of credit I can borrow the money back if times get tough or I need to make expensive repairs at some point.

Thanks for your response.

Re: Is reverse mortgage interest deductible

Critter — Tue, 24 Dec 2019 22:47:50 GMT

Interesting ... well if you get a 1098 from the mortgage company showing the interest paid then according to the tracking rules if you used it for the purchase of a primary residence I guess it could be deductible ... however if the home you have the loan on is no longer homesteaded as your primary residence this will make the outstanding balance due immediately. Seems like a slippery slope.

Re: Is reverse mortgage interest deductible

NewRicky — Tue, 24 Dec 2019 21:31:35 GMT

Did you receive this? NewRicky

Re: Is reverse mortgage interest deductible

NewRicky — Tue, 24 Dec 2019 21:58:26 GMT

Yes, thanks.

Re: It is not - unless you paid off the loan in full. Any int...

huiel — Mon, 03 Feb 2020 02:22:17 GMT

How do I indicate a reverse mortgage in Turbo Tax? I only see options to designate the mortgage as a refinance or a HELOC. How do I designate a HECM???

Re: It is not - unless you paid off the loan in full. Any int...

Critter — Mon, 03 Feb 2020 02:28:20 GMT

A reverse mortgage is NOT entered on an income tax return since you are not making payments on the loan. You cannot deduct the accruing interest on the loan.

Re: It is not - unless you paid off the loan in full. Any int...

huiel — Mon, 03 Feb 2020 14:18:11 GMT

I did not pay it off, but I DID make voluntary payments in 2019 ... so the lender issued a 1098.

And in order to report that 1098, I need to designate this loan as an HECM.

Which brings me back to my initial question of how I do that.

Re: It is not - unless you paid off the loan in full. Any int...

Critter — Mon, 03 Feb 2020 14:29:18 GMT

Technically it is a HELCO (that you don't need to make payments on) or a refinance of an original loan ... follow the interview screens.

Re: It is not - unless you paid off the loan in full. Any int...

Marshafaye — Thu, 20 Feb 2020 05:48:51 GMT

Are the Mortgage Premiums charged deductible?? It sounds like laws were changed, however if so....where do I enter that? They show on the 1098

Re: It is not - unless you paid off the loan in full. Any int...

Irene2805 — Thu, 20 Feb 2020 19:20:26 GMT

Yes -- Congress passed legislation last December that reinstated the deduction for Mortgage Insurance Premiums . To enter your mortgage insurance premiums, please follow these steps:

Click on Federal > Deductions & Credits
In the Your Home section, clicking the Start/Revisit box next to Mortgage Interest, Refinancing, and Insurance (Form 1098).
If you've already entered information on your mortgage, you will be brought to the Mortgage deduction summary screen. Click the Edit box next to your lender's name. Continue through the screens until you reach Let's get the details from your [lender's name] 1098 now. Enter the Mortgage Insurance Premiums in Box 5 - Mortgage insurance Premiums.

Re: It is not - unless you paid off the loan in full. Any int...

dcb1995 — Sat, 14 Mar 2020 23:33:56 GMT

This last step for Mortgage Insurance does not work because TurboTax requires that the mortgage balance and origination date not be blank.

Re: Is reverse mortgage interest deductible

Liberty1 — Sun, 19 Apr 2020 13:36:34 GMT

Is that for reverse mortgages too? We have a 1098 that says the MIP accrued is $1094.51 can I deduct that? My mother has a reverse mortgage and we got a 1098 for 2019 I’ve never seen a statement like this before do I do anything about it or just keep it ? Do I file anything? The 1098 says annual escrow and interest statement . she still alive and she still living in the house. Also We already filed her tax return but can I do an amendment to get the deduction for the MIP? Thank you