We took out first reverse mortgage in 2015 and due to inflation took advantage of a refi with new lender in 2017 still using reverse mortgage, Interest is $9400, Insurance is $10500 on the 1098 reported by the first lender. Our income is more than the total of these deduction amounts. Are we legally allowed to deduct?
Yes, since you paid off the first reverse mortgage.
Any interest accrued on a reverse mortgage is not deductible until you actually pay it (
usually when you pay off the loan in full). This is what you did when you refinanced.