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The income-tax department's recent move to tax-exempt annuity payments received under a reverse mortgage scheme will make this product an attractive proposition for senior citizens.
To further expand the popularity of the reverse mortgage scheme, National Housing Bank (NHB) is exploring the possibility of providing refinance of banks’ and housing finance companies’ exposure to this scheme, its Chairman & Managing Director, R.V. Verma, said here today.
A reverse mortgage is a financial instrument that allows people over 60 years of age to access the equity in their home without income or credit qualifications.
Prior to the latest I-T department move, the annuity-based concept of reverse mortgage did not find many takers.
This was because the Government approved RMS did not till date specifically recognise annuity-based payments as a mode for providing reverse mortgage.
No tax exemption was therefore available for annuity payments received by the person opting for reverse mortgage).
With the I-T department recognising the annuity-based payments and providing tax exemption for such payments, the NHB has decided to "fully reactivate" the marketing of this scheme, Verma said.
"The income-tax department move will give a new impetus to the whole scheme. The annuity product will now be much more beneficial to the senior citizen,” Verma said.
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