Section VI: Income Tax and Your Financial Planning

• Ques: Reverse mortgage is best for tax-free monthly instalments after retirement
• Ans: Key points:
  • This is one of the best and latest step taken by Government of India for people above 60 years of age and need financial assistance.
  • Maximum loan period is generally 15 years.
  • One can choose between lump sum amount or periodical payments.
  • There is no EMI payable on this loan.
  • The house mortgaged remains with the owner till he is alive. After death legal heir can get the house if they are ready to pay the outstanding balance in reverse mortgage loan.
  • This is helpful when you want to live in that house but need cash for living and medical expenses etc.
  • SBI and Diwan housing finance have started the reverse mortgage loans.
  • Receipts from reverse mortgage are fully exempt from tax.
  • DREAM RETIREMENT: Retired and want peaceful living at religious place. Convert your taxable fixed deposits, NSC, KVP, bonds etc into cash. Hence no regular income and no tax. Buy house at your dream place. Now for daily expenses and medical needs get reverse mortgage for 15 years. PPF and gold should be kept for lump sum financial needs. One can invest in post office MIP and senior citizens scheme also, returns are high but taxable therefore interest income from these should come below taxable income Rs. 2,25,000. Post office branches are available at remote places also, safe and secure.