“Which reverse mortgage is right for me?” + MORE Sep 14th

Q. I liquidated a large mutual fund in 2020 to transfer to an ETF with lower fees. Of course, capital gains caused my 2020 income to increase to beyond the bottom threshold for OAS recovery. I understand there is a form to fill to say next year’s income will be lower. However, if I do not fill that form, does everything “come out in the wash” for subsequent years’ tax returns? In other words, would the lost benefit become a “credit” that is then returned to me?–Sam

A. Old Age Security (OAS) is a government pension for those aged 65 and older that is means-tested—in other words, whether or not you receive it is dependent on your income. Seniors with a low income may be entitled to a top-up called the Guaranteed Income Supplement (GIS); and at the other end of the scale, recipients with a high income may have their Old Age Security reduced due to an OAS recovery tax or clawback. 

OAS clawback applies in 2021 for those whose net income on line 23600 of their tax return exceeds $79,845…

When Vancouver condo owners Maggie and Rob found out they were on the hook for $400,000 in improvement costs to their building and unit as required by an assessment from their Strata Council, they weren’t sure what to do. (We’ve changed their names and some details to protect their privacy.)

The couple, who are in their early 80s and mortgage-free, have lived in the large upscale Kitsilano condo for the past 20 years and were not anticipating a financial obligation of this magnitude during retirement. So the results of an assessment from their Strata Council, which requires them and other unit owners to find six-figure sums in short order, came as a shock. While they have about a half-million dollars in investments they could use to cover the improvement costs, liquidating those assets would come with a serious tax hit. And their income isn’t high enough to qualify for a home equity line of credit (HELOC) or mortgage refinance.

Making matters worse, Rob’s health has been failing, which puts moving out of the question…