Are Reverse Mortgages Taxable

Thank God No.

The amounts received from a reverse mortgage are not taxable.

Why ?   A reverse mortgage is a loan.

The lender is paying 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 is not taxable.

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 discussed in Part II of Publication 936, Home Mortgage Interest Deduction.

Are Reverse Mortgages Taxable, Answer Here from Fresh Start Tax LLC