@Mauricio Perez Your mother should not pay any taxes on the proceeds. If there is any gain after the reverse mortgage is paid off, it is tax free up to $250,000 of profit. Depending on how much there is left would determine what to do with the money. I would keep some cash for emergencies, insurance deductibles, etc. The rest could be used to pay ahead on her rent so she doesn't have to worry about it. If she wants to invest, I recommend an S&P 500 index fund through any online site such as Ameritrade.
@Mauricio Perez The house sale will not cause any capital gains taxes due unless she made over $250k profit. As for what to do after the sale, please see a few posts I made last year on renting to parents. There are pros and cons, and lots of valid opinions. It's not directly addressing your question, but I hope you find it helpful.
All the best.
Interest income funds using dividends
to supplement her income.....
Hmm... u should try ask this question at earlyretirement.org for suggestion instead of here since u don’t want to invest it back at housing.
I would talk to a financial advisor, particularly one who is not motivated to just sell to your mom.
An idea I heard on one of the earlier episodes of the podcast is investing in high quality, discounted notes. Might be worth exploring.
Nice! Thanks guys!
One of you answered a question I had. Profit AFTER paying off reverse mortgage is definitely under 250k, and I thought that rule applied to gross profit. Thanks!
And the income dividends sounds good too. Another thought I’d considered. I already have a brokerage account for her where I invest in a high yield REIT.
You guys are the best. Thanks for answering a question that’s probably a little outside the box of the usual here.
I welcome any more feedback!
Has nothing to do with a mortgage. Just what she paid for the house minus from selling proceeds is less than 250k. If over 250k yes she'll pay taxes. The fonz's reverse mortgage is irrelevant.
Also, surprised no one said call a wholesaler for a win win. :)
I know you said without buying another property, but especially if you live near by what about considering a duplex so she could live in one side and have a tenant in the other side to defray her "rent" costs?
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