Is Reverse Mortgage Interest Tax Deductible?
Mortgage interest is a common tax deduction for homeowners. But what if you don’t have a traditional mortgage? Is reverse mortgage interest tax deductible? Do reverse mortgage payments count as income?
In this post, we’ve sifted through the IRS rules and jargon to find the answers to these and other reverse mortgage questions. Whether you’re planning for retirement or looking to tap into your home’s equity, our guide will help clarify what you need to know.
Editor’s note: This post is for educational purposes and is not intended to be construed as financial or tax advice. HomeLight encourages you to reach out to an advisor.
What is a reverse mortgage?
A reverse mortgage is a loan available to seniors and retiring homeowners that allows them to convert part of the equity in their home into cash. Unlike a traditional mortgage, which requires monthly payments to the lender, with a reverse mortgage, the lender pays you.
You can receive a one-time lump sum, a set monthly amount, or a line of credit that you can use to pay off other debt, living expenses, medical bills, or to make a major purchase such as an RV or European vacation.
