How Reverse Mortgages Help You With Taxes In Retirement

Reverse Mortgage Tax Benefits: How Reverse Mortgages Help You Manage Taxes in Retirement

How can reverse mortgage tax benefits improve your retirement plan? In this video, Bob Powell interviews Don Graves, president of the Housing Wealth Institute, about how reverse mortgages can help retirees reduce their tax burden and create more flexible income streams. Don is the author of three books on reverse mortgages and serves as an adjunct instructor of retirement income at the American College of Financial Services.

A reverse mortgage is a federally insured loan available to homeowners aged 62 or older. The most common version is the Home Equity Conversion Mortgage (HECM). It allows retirees to borrow money against the value of their home without selling it, giving up ownership, or making monthly mortgage payments. Proprietary (non-government) products also exist, but HECMs are the most widely used.

One of the key reverse mortgage tax benefits is the growing line of credit. For example, a 65-year-old with an $800,000 home could access approximately $236,000 through a reverse mortgage line of credit. This line grows over time and can be tapped strategically, helping retirees manage required minimum distributions (RMDs), reduce taxable withdrawals from retirement accounts, or delay claiming Social Security benefits.

By carefully timing withdrawals from the reverse mortgage, retirees may lower their overall tax liability and create more sustainable income over time. This strategy is especially helpful in market downturns or periods of high inflation.

Watch this free video featuring Don Graves to explore seven tax-efficient ways to use reverse mortgages in retirement. For more educational content on retirement strategies, visit Finstream.tv.