Client signed a reverse mortgage that paid off the original acquisition loan.
They took a lump sum (not annuity).
At closing $3,100 was charged as MIP and added to the loan balance. There is
also a charge for MIP each month which has been added to the loan balance. The
paperwork states this is paid to HUD and charged to the borrower.
The client states even if the reverse mortgage balance goes above the FMV of the
home, the amount due on the loan can never be greater than the home's FMV.
A 1098 was issued with box 4 filled out for the $3,100 charged at closing plus
the amounts rolled into the loan each month (total $4,000). However, box 1 of
the 1098 is blank even though $3,900 of interest shows to have accrued and been
added to the mortgage balance.
The IRS has makes it clear the interest is not deductible this year.....but what
about the MIP......do I amortize the $3,100 over 84 months and take the rest of
the MIP charged each year as a Schedule A deduction?
- posted 7 years ago