That is correct.. With a reverse mortgage you can take a lump sum payment or monthly payments.. Most older people that have a mortgage take a lump sum to payoff the mortgage so they no longer have payments until they die. (but no monthly pay out payments) and yes they kept track and reported all the interest when it was paid off. The properties in the trust (This one and 8 others) are now all rentals and with the stepped up basis and reset depreciation are operating with a net loss so this deduction would just be adding to that loss being carried forward.. So, I'm thinking even if it's borderline to take the deduct in the trust I don't have much to lose because if I got audited 5 years from now and they disallowed it the properties would be only be carrying forward the loss so there shouldn't be any penalty (Just the loss of the deduction being carried forward)
