Deducting the CHIP Home Income Plan interest can offset the income earned by non-registered investments, providing tax-efficient income.

How?

  • Your CHIP Annual Statement clearly indicates the amount of interest you have been charged and that may be eligible as a tax deduction.
  • This deduction may also ensure that the extra income you earn does not affect Old Age Security and Guaranteed Income Supplement government benefits.
  • Be sure to consult a tax advisor to determine how this approach affects your personal situation.
  • Keep investments made with your CHIP Home Income Plan money separate from other investment assets. It’s important to be able to identify the investments that are associated with the interest deduction.
  • Good record keeping is required because if you take part of the principal out of your investment, it will affect the amount of interest expense you can deduct.
  • Be sure to consult a tax advisor to determine how this approach affects your personal situation.

A reverse mortgage is very popular in Canada. Through this mortgage plan, seniors in Canada can be assured of financial security. Based on this plan, a homeowner is allowed to receive a good amount of money by utilizing a part of his/her home equity. 

With a reverse mortgage, you receive cash from a lender or bank without having to sell your property. You are eligible for a reverse mortgage only if you and your spouse are 55 years old or more and you own a home.

Some of the major benefits of a reverse mortgage in Canada include the following:

  • In case of a reverse mortgage, once you receive payment from a lender in Canada, you need not make any monthly payments.
  • In Canada, seniors generally have a good surplus home equity earned during their service period. Therefore, it becomes really easy for them to qualify for a reverse mortgage as this does not require any credit score or income status. Also, to qualify for the mortgage, they need to be at least 60 years old.
  • Another major benefit of a reverse mortgage is that the money seniors receive from the lender is absolutely tax-free. The loan is based on their home for which they have already paid the required tax. Further, the loan-based cash is not an income; rather it is simply the cash form of the home equity.
  • The reverse mortgage programs do not force the borrowers to leave their home if they have taken the loan. The seniors in Canada who opt for a reverse mortgage have all legal ownership on their home unless they pass away or decide to sell it or move from their home.
  • The money received through the reverse mortgage can, however, be utilized for any purpose. Canadian seniors can utilize the said money in any way they want, including paying the maintenance and other utility bills of their house or going out for a vacation.
  • In some cases, Canadians fail to pay their bills on time which may result in their moving out of their house. With the money they can get from a reverse mortgage, they can be free from such financial burdens that would not let them move out of their house.

You can use the money any way you wish. Maybe you want to enjoy your retirement or cover unexpected expenses. Perhaps you want to update your home or help your family without depleting your current savings. The only condition is that any outstanding loans (e.g. existing mortgage or home equity line of credit) secured by your home must be paid out with the proceeds from your CHIP Reverse Mortgage.

No regular mortgage payments are required while you or your spouse live in your home. The full amount only becomes due when you and your spouse no longer live in the home

You maintain ownership and control of your home. You will never be asked to move or sell to repay your CHIP Reverse Mortgage. All that’s required is that you maintain your property and stay up-to-date with property taxes, fire insurance and condominium or maintenance fees while you live there.

You keep all the equity remaining in your home. In many years of experience, 99 out of 100 homeowners have money left over when their CHIP Reverse Mortgage is repaid. And on average, the amount left over is 50% of the value of the home when it is sold.

 

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