Can I deduct the interest or monthly Mortgage Insurance premium on a Reverse mortgage

[horsed12]

is there any deductions i can  use  on a reverse mortgage

[KrisD · Accepted solution]

Question

Are the proceeds I receive from a reverse mortgage taxable to me?

Answer

According to the IRS:

"No, reverse mortgage payments aren't taxable. Reverse mortgage payments are considered loan proceeds and not income. The lender pays you, the borrower, loan proceeds (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 preselected loan period, or die.
• Interest (including original issue discount) accrued on a reverse mortgage isn't deductible until you actually pay it (usually when you pay off the loan in full). Also, a deduction of interest may be limited because a reverse mortgage generally is subject to the limit on home equity debt, which is not deductible unless the proceeds are used to buy, build, or substantially improve the home that secures the loan. For information on deducting mortgage interest and the debt limit that applies, see Publication 936, Home Mortgage Interest Deduction."

https://www.irs.gov/faqs/other/for-senior-taxpayers/for-senior-taxpayers

[K Larson]

The only reply addressed the interest on a reverse mortgage. My question concerns the insurance premium portion. Is it deductible?

[Irene2805]

It depends -- You can deduct amounts you paid for qualified mortgage insurance premiums on a reverse mortgage. However, the insurance contract

1. must have been issued on January 1st of 2007 or later, and
2. the reverse mortgage debt itself must be classified as acquisition indebtedness and not home equity indebtedness.

If you took out a reverse mortgage on a house you already owned you will not be able to deduct the mortgage insurance premiums.

@K Larson