Reverse Mortgage deduction

[bobp1426]

We refinanced our primary home in Dec. with a Reverse Mortgage.  We only paid for the appraisals on the house out of pocket ($500).  Can we deduct this cost as part of the refinancing and if so, were do we report it?

[HelenC12]

No, you can't deduct the $500 appraisal fee because closing costs are not deductible.

•  You can only deduct closing costs for a mortgage refinance if the costs are considered mortgage interest or real estate taxes or points (prepaid interest).

Reverse mortgages are not entered on your tax return. Reverse mortgage payments aren't taxable. Reverse mortgage payments are considered loan proceeds and not income. ... 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). Source: Coleen3

[bobp1426]

Thanks.  Another question.  If I make some partial payments towards the loan, that would pay some of the interest and insurance charges accumulated.  Since I paid interest, would that be deductible in the year I make the partial payments?

[DaveF1006]

Yes, your interest payment would only be deductible in the year you made the payment.

[wibnel5151]

What deductions can I take?

[PattiF]

There are generally no deductions that you can take. Interest isn't deductible until you actually pay it which is usually when the loan is paid off. The interest is deductible when it is used to buy, build or substantially improve the home that secures the loan.

Here is some information concerning a Reverse Mortgage from the IRS.