Interest on reverse mortgage lines of credit is only deductible when it is paid; typically, the interest accrues and is only paid when the loan matures (i.e. is paid off).
From the IRS Are the proceeds I receive from a reverse mortgage taxable to me?
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. For information on deducting mortgage interest and the debt limit that applies, see Publication 936, Home Mortgage Interest Deduction.
If you are paying the interest as it accrues AND meet the other mortgage interest deduction limitations (mortgage balance and use of funds), then it is deductible in the year paid.
