What is Reverse Mortgage?
What is it: Through reverse mortgage, capital value of a home is converted into an annuity over the home owner’s lifetime
How Does it work: The bank gives the mortgage loan against the value of the property. A person gets annuity for as long as he lives. On his death, the principal amount is paid back to the bank
Time Limit: Most reverse mortgage loans from banks have a time limit of 20 years. The property is mortgaged to the bank
Can the property be inherited: If the owner’s children don’t pay up the interest part and free up the mortgage, the bank will sell the property
Does not qualify as income: Reverse mortgage loan does not amount to “transfer of property” under the head capital gains tax