How a Reverse Mortgage can Impact Your Taxes
Are you interested in receiving a no risk cash infusion?
After contributing to society for decades, many retirees love the options that their new lifestyle has. This can include the opportunities to kick back, relax, and devote your free time to tackling your unique interests. Common interest pursued by retirees can include, and is not limited to painting, travel, or spending more time with your family—especially your grandchildren.
Many retirees, unfortunately, have to sacrifice some of their free time to their health. This can include periodic hospital visits for oneself or your spouse, which over a series of several visits, can be extremely costly.
It is commonly known that many retirees depend on a fixed monthly income. This income can arise from social security payments; medicate benefits and/or the dividends from their various investments in the stock market. For the latter, it can be tempting to dip your hand in the pot and withdraw from the principle, but there is a better option you can take than to break that cardinal rule.
Increase Your Monthly Income with a Reverse Mortgage Cash Infusion
In order to address your payments, while continuing to devote time to your interest, a popular product for people the age of 62 or older is to receive a cash infusion from a reverse mortgage.
Basically, the funds from your potential cash infusion(s) can go towards a number of different things, depending upon your situation. There isn’t a specification telling you how to spend your money.
Being a new concept, what exactly does a reverse mortgage mean and how does this affect my taxes?
In a typical mortgage over the course of several years, one pays the lender a fixed amount per month on their home. Prudence and consistency over several years allows the payer to eventually complete the American Dream, which is to own your own home!
On the contrary, a reverse mortgage is a simple way to reward you for diligent payments over the years. Hence the word “reverse,” a reverse mortgage allows those in need of a cash infusion, to receive funds from their lender. This works because you are in effect selling a portion of your home to the lender.
This is excellent news for many seniors over the age of 62. You can receive money for various activities and still stay comfortable in your own home. All that is required is a simple application, which is available for download on our website. Our company is constantly on-top of the numerous request received on a day-to-day basis. You can have the confidence that this will be completed quickly and efficiently.
For instance, if after 30 years you finish paying off your $225,000, you can receive a loan from the lender up to the value of the property. In this case, you may need $50,000 for miscellaneous reasons. When you eventually sell the home, the lender has first dibs on the proceeds, effectively leaving $50,000 to the lender to pay off the loan, while the remaining $175,000 of proceeds goes to your pocket.
Reverse Mortgage Tax Implications
To take a step back, when you are approved to receive a certain amount of funds from the lender, the next step is to choose how you want your funds to be dispersed. It can be paid to you in the following ways:
- A lump sum
- A monthly payment, or
- A line of credit
How you plan on using the funds should determine the form of dispersing of those funds. Take a moment to imagine how you want to potentially use these funds. Is it for one of your interest,—such as the ones described earlier in this article—to pay off a medical bill, or some other type of bill?
Regardless of the intended usage of the funds, reverse mortgages are an excellent option in relation to tax payments. One of the reasons why reverse mortgages are such a popular option is that a reverse mortgage is consider a loan advance, not as income earned, which some people often confuse it for. Therefore, the payments that you receive from the lender are not taxable! In addition, do not affect the much needed dispersion of payments that arise from Medicare benefits or Social Security.
The Next Step
In conclusion, a reverse mortgage is a simple way for you to receive a cash infusion to spend on however you deem appropriate. This can be so you can pursue more of your favorite activities and interest, or to pay off medical bills that may arise. The reverse mortgage not taxable and is considered as a loan.
Having read this article, you may have additional questions on what a reverse mortgage is and how a reverse mortgage can affect your taxes. It is great that you want more information to determine if this is the right option for you.
To obtain additional guidance, the first step that is recommended is to increase your knowledge on the subject by browsing our site where we have provided a wealth of related information. This information can just about address any question that you can postulate. For instance, our learning center, which is accessible by clicking here, provides the most current information on the subject.
A second option that you can choose to take is to reach out to one of the specialist on our team that is standing by (Monday-Friday: 9 a.m. to 8 p.m. EST and Saturday – Sunday: 12 p.m. to 3 p.m. EST) and is knowledgeable on this subject, also capable of answering any question you may have. The representative can also analyze you current situation and provide a rough estimate on your potential cash infusion.
Our company has an excellent relationship with the top banks in operation today, including but not limited to Bank of America, Wells Fargo, JP Morgan Chase, HSBC, Citi Bank and TD Bank. This means better rates for you on your potential loan from the reverse mortgage.