Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

Reverse Mortgage Loan Interest

bradstreet22
Level 1

With a reverse mortgage loan, we know that interest is not tax deductible until actually paid. For example, a paydown on the loan balance would generate some paid interest. Question: If a borrower with a reverse loan refinances it for a higher loan amount, is there interest considered paid on the old loan at the time of the re-fi? Thank you.

0 Cheers

This discussion has been locked. New comments cannot be posted on this discussion anymore. Start a new discussion

1 Best Answer

Accepted Solutions
rbynaker
Level 13

Keep in mind the tracing rules.  Even if interest is paid, the only interest deductible would be that which is allocated to the principal amounts borrowed that were used to buy, build or substantially improve the residence.

View solution in original post

3 Comments 3
IRonMaN
Level 15

Do the loan documents show that interest was actually paid.  Did they receive a 1098?


Slava Ukraini!
bradstreet22
Level 1

Don't have the doc.s yet. Transaction was in 2020 so too early to receive any 1098 form.

 

 

0 Cheers
rbynaker
Level 13

Keep in mind the tracing rules.  Even if interest is paid, the only interest deductible would be that which is allocated to the principal amounts borrowed that were used to buy, build or substantially improve the residence.