Tag: taxes

Everything You Need To Know About Taxes And Your Reverse Mortgage In Colorado

Posted on by janjordan

Everything You Need To Know About Taxes And Your Reverse Mortgage In ColoradoAs the end of the year approaches, it’s common to start receiving some questions about taxes and reverse mortgage. There are many differences between a reverse mortgage and a traditional mortgage – and taxes are a big one.  Here’s a run down of what to expect come tax time if you have a reverse mortgage.

The Tax Liability Issue

Because any funds you receive from a reverse mortgage are essentially an advance on your home equity – equity you already own and have paid for, the IRS does not consider money received from a reverse mortgage as income, they consider it an advance, therefore it is not taxed as income.  This is the case regardless of how you receive the funds – whether monthly installments, a line of credit, or a lump sum, you will never pay income tax on this.

What About Deductions on Interest?

Here’s one situation where there is a stark difference between a traditional mortgage and a reverse mortgage.  With a traditional mortgage interest and fees paid are tax deductible every year they are paid.  This is still the case with a reverse mortgage, except in the scenario of a reverse mortgage the interest is not paid until the loan comes due, therefore it cannot be claimed as a deduction until this point.  The loan comes due if the borrowers sells the home, passes away, or permanently leaves the home.

Property Taxes

With a traditional mortgage, property taxes are often taken care of by an escrow service.  With a reverse mortgage the homeowner is 100% responsible for making sure these property taxes are kept up to date.  If there are financial concerns about the ongoing cost of property taxes, discuss this with your reverse mortgage specialist.  In the financial assessment there are options to help set aside a portion of the funds to cover ongoing expenses such as property taxes and homeowner’s insurance.

Reverse mortgages are available to homeowners 62 and over, including married couples, with many protections in place to ensure borrowers are adequately educated before using this option, such as required third-party counseling.  Reverse mortgages are gaining in popularity among retirees from all walks of life.  A reverse mortgage for purchase option is available for those looking to purchase a new residence.

Jan Jordan is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, Longmont, Boulder and other Front Range areas of Colorado, as well as the Cheyenne and Laramie communities of Wyoming.  Contact Jan and learn if reverse mortgage is right for you.

The Scoop On Reverse Mortgage And Taxes

Posted on by janjordan

reverse mortgage loveland colorado fort collins longmont greeley boulderThere are many differences between a reverse mortgage and a traditional mortgage – and taxes are a big one.  Here’s a run down of what to expect come tax time if you have a reverse mortgage.

The Tax Liability Issue

Because any funds you receive from a reverse mortgage are essentially an advance on your home equity – equity you already own and have paid for, the IRS does not consider money received from a reverse mortgage as income, they consider it an advance, therefore it is not taxed as income.  This is the case regardless of how you receive the funds – whether monthly installments, a line of credit, or a lump sum, you will never pay income tax on this.

What About Deductions on Interest?

Here’s one situation where there is a stark difference between a traditional mortgage and a reverse mortgage.  With a traditional mortgage interest and fees paid are tax deductible every year they are paid.  This is still the case with a reverse mortgage, except in the scenario of a reverse mortgage the interest is not paid until the loan comes due, therefore it cannot be claimed as a deduction until this point.  The loan comes due if the borrowers sells the home, passes away, or permanently leaves the home.

Property Taxes

With a traditional mortgage, property taxes are often taken care of by an escrow service.  With a reverse mortgage the homeowner is 100% responsible for making sure these property taxes are kept up to date.  If there are financial concerns about the ongoing cost of property taxes, discuss this with your reverse mortgage specialist.  There are options to help set aside a portion of the funds to cover ongoing expenses such as property taxes and homeowner’s insurance.

Jan Jordan is a Reverse Mortgage Specialist serving the Boulder, Longmont, Fort Collins, Loveland, Greeley, and Front Range areas of Colorado as well as Cheyenne and Laramie, Wyoming.

 

Taxes and a Reverse Mortgage in Colorado

Posted on by janjordan

reverse mortgage loveland colorado fort collins longmont greeley boulderSpring has sprung in Fort Collins and Loveland again!  That’s the good news.  The bad news is this also means it’s tax time.  It’s common during this time of year for me to receive a few questions regarding taxes and reverse mortgage – from both those considering a reverse mortgage, and those who already have a reverse mortgage.

 

Here are the two most common:

 

Are the funds from my reverse mortgage considered taxable income? 

 

No.  Because the funds received from a reverse mortgage are technically an advance on a loan, any payments or lump sums received are not taxable income, meaning they do not need to be reported on a tax return as such.  They also typically do not affect Social Security or Medicare payments.

 

Is the interest from my loan deductible? 

 

No.  Because reverse mortgage holders do not make monthly mortgage payments and typically the interest is not paid until the loan is paid in full, the interest from a reverse mortgage loan is not deductible on a tax return.  This is also the case with a reverse mortgage for purchase loan.

 

FHA insured reverse mortgages are available to homeowners 62 and older with no credit or income requirements until April 27th, 2015 (at this time some changes will take place to the qualifying process).  These loans allow the borrower to live mortgage payment free and receive their loan payment in one lump sum or in monthly installments.  All borrowers are required to participate in third party counseling to ensure all their questions are adequately answered before making a decision.  Reverse mortgages are also available to purchase a new residence.

 

Jan Jordan is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, Longmont, Boulder and other Front Range areas of Colorado.  Click here to contact Jan and learn if reverse mortgage is right for you.

Taxes and your Reverse Mortgage

Posted on by janjordan

reverse mortgage loveland colorado fort collins longmont greeley boulder

 

Spring has sprung in Northern Colorado again!  That’s the good news.  The bad news is this also means it’s tax time.  It’s common during this time of year for me to receive a few questions regarding taxes and reverse mortgage – from both those considering a reverse mortgage, and those who already have a reverse mortgage.

 

Here are the two most common:

 

Are the funds from my reverse mortgage considered taxable income? 

 

No.  Because the funds received from a reverse mortgage are technically an advance on a loan, any payments or lump sums received are not taxable income, meaning they do not need to be reported on a tax return as such.  They also typically do not affect Social Security or Medicare payments.

 

Is the interest from my loan deductible? 

 

No.  Because reverse mortgage holders do not make monthly mortgage payments and typically the interest is not paid until the loan is paid in full, the interest from a reverse mortgage loan is not deductible on a tax return.  This is also the case with a reverse mortgage for purchase loan.

 

FHA insured reverse mortgages are available to homeowners 62 and older with no credit or income requirements.  These loans allow the borrower to live mortgage payment free and receive their loan payment in one lump sum or in monthly installments.  All borrowers are required to participate in third party counseling to ensure all their questions are adequately answered before making a decision.  Reverse mortgages are also available to purchase a new residence.

 

Jan Jordan is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, Longmont, Boulder and other Front Range areas of Colorado.  Click here to contact Jan and learn if reverse mortgage is right for you.