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For Senior Taxpayers

Question: Are the proceeds I received from a reverse mortgage taxable to me?

Answer:

No, the amounts received from a reverse mortgage are not taxable.  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.

Additional Information:


Category: Other
Subcategory: For Senior Taxpayers

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The OMB number for this study is 1545-1432.
If you have any comments regarding this study, please write to:
IRS, Tax Products Coordinating Committee
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue NW
Washington, DC 20224