If seniors compare the reverse mortgages to the usual income, the tax free feature is really big. The seniors make it wise, that before they sign reverse mortgages they discuss with the counselor, who is an expert to tell, whether the reverse mortgages are tax free in that particular state. In some cases the lump sum payments are not tax free.
1. The Money Comes From The Home Equity.
If you think this, you understand easily the tax free feature. This money is not a typical income but it really comes from the equity, which is owned by the borrower. And the taxes are once paid. However, it is wise to check the rules before signing.
2. The Medicaid.
The tax free feature is just one benefit, which the reverse mortgages offer. But there are also dangers, like a threat to lose the eligibility to Medicaid. The rules vary state by state and the only way to make sure is to ask from the federal counselor. One arrangement is to transfer the money away from your own name into a certain trust, so that you are not anymore the official owner of these funds.
U.S.Government has strict rules concerning these transactions. It is wise to follow these rules. The general idea is, that the payment from the reverse mortgage is not an income, if the money is spent during the same month as received.
3. The Paid Interests Can Be Deducted From The Taxes.
The interests, either fixed or variable ones, will not be paid until the loan will be closed. Then the home will be sold and all the costs will be deducted from the selling price, including the interests. The borrower can deduct the paid interests in the taxation. If the loan running time has been a long one, this is a real benefit.
4. The Home Price Increases Are Part Of The Tax Free Income.
Usually and during the long term, the home prices develop very well meaning, that the homes are good investments. When a retired person will take a reverse mortgage loan against the value of the home, he will actually benefit from this phenomen tax free.
5. Prepare For The Counselor Meeting.
The counselor is the friend of a senior citizen. His only target is to help seniors to solve their financial problems with the reverse loans or in some other way. It is wise to make a question list for the meeting, because these issues include a lot of details, which are important.
1. The Money Comes From The Home Equity.
If you think this, you understand easily the tax free feature. This money is not a typical income but it really comes from the equity, which is owned by the borrower. And the taxes are once paid. However, it is wise to check the rules before signing.
2. The Medicaid.
The tax free feature is just one benefit, which the reverse mortgages offer. But there are also dangers, like a threat to lose the eligibility to Medicaid. The rules vary state by state and the only way to make sure is to ask from the federal counselor. One arrangement is to transfer the money away from your own name into a certain trust, so that you are not anymore the official owner of these funds.
U.S.Government has strict rules concerning these transactions. It is wise to follow these rules. The general idea is, that the payment from the reverse mortgage is not an income, if the money is spent during the same month as received.
3. The Paid Interests Can Be Deducted From The Taxes.
The interests, either fixed or variable ones, will not be paid until the loan will be closed. Then the home will be sold and all the costs will be deducted from the selling price, including the interests. The borrower can deduct the paid interests in the taxation. If the loan running time has been a long one, this is a real benefit.
4. The Home Price Increases Are Part Of The Tax Free Income.
Usually and during the long term, the home prices develop very well meaning, that the homes are good investments. When a retired person will take a reverse mortgage loan against the value of the home, he will actually benefit from this phenomen tax free.
5. Prepare For The Counselor Meeting.
The counselor is the friend of a senior citizen. His only target is to help seniors to solve their financial problems with the reverse loans or in some other way. It is wise to make a question list for the meeting, because these issues include a lot of details, which are important.
