Thank you for your help.
I understand that the current refinanced loan interest is deductible. It is a second home and I do itemize.
My big question is about the reverse mortgage we refinanced. After reading the IRS 936 publication, I believe what you referenced applies to those who currently have a reverse mortgage and I agree the interest accrued while the loan is in place would not be deductible.
Researching I found this "Interest (including original issue discount) accrued on a reverse mortgage isn't deductible until you actually pay it (usually when you pay off the loan in full). Also, a deduction of interest may be limited because a reverse mortgage generally is subject to the limit on home equity debt, which is not deductible unless the proceeds are used to buy, build, or substantially improve the home that secures the loan." Here is the IRS FAQ where it is referenced
We payed off the reverse mortgage in full and used all the proceeds to buy (refinance) the home which would meet the deductible limit on home equity debt correct? If this is the case wouldn't the interest accrued on the reverse mortgage be deductible?
Thank you for your help. Doing research I am getting conflicting information and want to make sure I handle this correctly.
