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Latest Postings
- 1. February 2012: Florida State Unemployment Tax Rates 2012
- 21. January 2012: 2011 Health Insurance MUST be on W2 for >2% Sub S shareholder
- 17. January 2012: 2012 Mileage Rates
- 13. January 2012: Vacation Homes - sometimes you don't declare the rent!
- 11. January 2012: How Often Does Tax Law Change....
- 26. December 2011: 2012 Payroll Tax Cut Extended 1st Two months
- 27. November 2011: Ballgames - can you deduct?
- 15. November 2011: WHAT IS HIGH DEDUCTIBLE HEALTH PLAN
- 15. November 2011: HSA 2011 Contributions
- 20. October 2011: 2012 Social Security Increase
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Reverse Mortgages - Taxable? Deductible?
Question: Are the amounts a taxpayer receives from a “reverse mortgage” taxable? Deductible?
Answer: NO to both. Interest on a reverse mortgage loan added monthly to the outstanding loan balance as it accrues is neither taxable in a cash method lender’s gross income nor deductible by a cash method borrower at the time it is added.
- The primary purpose of a reverse mortgage loan is to enable elderly persons with limited incomes to remain in their homes.
- Repayment of the loan is due when the principal amount has been fully paid to the borrower (they receive monthly allotments),
- The residence that secures the loan is sold,
- The borrower dies, or the borrower ceases to use the home as the borrower’s principal residence