Capital Gains on Sale of Reverse Mortgaged Property

[Rocky K]

This is query regarding Capital Gains on Sale of Reverse Mortgaged Property to settle the loan. The Reverse Mortgage connected with Insurance Company for annuity. And not simple Reverse Mortgage.

Will the interest be considered as an Expense when the property is sold to settle the loan for calculation of Capital Gains ? As after paying the hefty interest to the lender the borrower ultimately doesn't get much in hand.

[DEV KUMAR KOTHARI]

Facts in details are required. about property: who acquired ? who created reverse mortgage? who is selling? What are allowable costs after cost inflation index?

Interest may not be allowed as expenditure at the time of sale of property against capital gains.

AI Summary

Interest deductibility on reverse mortgage loans may not be allowed against capital gains on sale of the property. The query asks whether interest paid under a reverse mortgage tied to an annuity can be deducted when computing capital gains on sale to repay the loan. The adviser requests factual specifics on ownership, mortgage creation, and the seller, and notes that allowable costs are determined after applying the cost inflation index. The adviser indicates that interest generally may not be allowed as an expenditure for capital gains computation, with deductible items confined to acquisition cost, indexed cost adjustments, and qualifying improvements.