mortgage interest deduction
I have recently paid off a large portion of my reverse mortgage which included a significant amount of interest charges. Are the interest charges deductible and if so can the amount be carried over from one year to the next?
Quick Answer:
Interest paid on a reverse mortgage is generally not deductible until the loan is fully repaid. This means that even if you've paid off a significant portion, including accrued interest, the interest is typically not considered "paid" for tax deduction purposes until the entire loan is satisfied.
When the entire reverse mortgage is eventually paid off (e.g., upon the sale of the home or settlement of the estate), the interest paid at that time may be deductible as qualified home mortgage interest, subject to the usual limitations.
There isn't a specific carryover provision for qualified home mortgage interest. If the interest becomes deductible upon full repayment, it is deductible in the year the loan is fully satisfied and the interest is actually paid.
Note: This answer is provided for convenience only. It is important that you speak to a CPA about your individual tax situation.
