Thank you very much for your assistance. With all of that in mind I asked taxpayer what the situation was on the reverse mortgage (which I was planning to do when I had a full grasp of the handling of Reverse mortgage interest), and I think it just got a lot simpler. He said he bought the home cash, and then immediately took out the reverse mortgage and took a lump sum distribution of $65k. He used all of that money to completely gut and remodel the home. He never received any other payments from the reverse mortgage. So my understanding is the entire mortgage interest and mortgage insurance would be deductible because all the debt was used to substantially improve the home.