There are many steps retirees can take to optimize their tax situation once they are no longer working. And a reverse mortgage can help that retirement tax picture, according to a recent article from MarketWatch.
Among 11 ways to cut taxes in retirement, MarketWatch notes the importance of taking withdrawals carefully, maximizing the tax bracket, converting to Roth IRAs—and considering a reverse mortgage.
The article describes the situation of a couple who are paying a 25% tax rate on their IRA income.
“Payments from a reverse mortgage on their condo would let them reduce their IRA distributions, …and thus reduce taxes,” MarketWatch explains, citing input from wealth manager Brett Horowitz, with Evensky & Katz/Foldes Financial in Coral Gables, Fla.
“Effectively they can get payments for the rest of their life and those payments may even exceed the value of their condo,” Horowitz tells MarketWatch. “When they pass away, the bank gets the condo and that’s it.”
Written by Elizabeth Ecker
