Question:   Are the amounts received from a "reverse mortgage" taxable or nontaxable income? I have looked in Publications 17, 525, 530, and 936 and could not find any relevant information.

Answer:   The amounts received from a reverse mortgage are not taxable income because a reverse mortgage is a loan.

• In a reverse mortgage transaction, the lender makes payments (in a lump sum, a monthly advance, a line of credit, or a combination of all three) to the borrower, while the borrower retains title to the home securing the mortgage and continues to live there.
• Depending on the loan agreement, the reverse mortgage and any accrued interest become due when the borrower dies, sells the home securing the mortgage, moves and no longer uses the home as a principal residence, or reaches the end of a pre-determined loan period.