Construction loan, insurance on construction loan, money spent above loan

Forum|Forum|7 years ago
June 7, 2019
3 replies
13 views

I incurred a construction loan to build my home, and want to know if the insurance to cover the loan during construction is deductible, and also the extra funds I paid outside the bank loan, i.e., decking, appliances, etc. (and/or the credit card interest incurred on those items.)

TurboTax Deluxe Online

Best answer by MinhT1

So long as the home becomes your main home or second home on the day it's ready for occupancy, you can deduct all the interest you paid on the construction loan within 24 months before the home was completed.

The 24-month period can start anytime on or after the day construction begins.

Insurance on the loan is deductible only if it is qualified mortgage insurance.Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006).

Credit card interest is not deductible.

Appliances and other items go in the cost basis of your home and are not deductible.

Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and taxpayer identification number (TIN) on the dotted lines next to line 11. The seller must give you this number and you must give the seller your TIN. A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Failure to meet any of these requirements may result in a $50 penalty for each failure. The TIN can be either a social security number, an individual taxpayer identification number (issued by the Internal Revenue Service), or an employer identification number.

K

krisupnorthAuthor

Level 2

Thank you. Other fees I paid were building permits, architectural fees and taxes charged by the contractor. Are these deductible?

M

MinhT1

Level 15

These fees have to be added to the cost basis of your home and are not deductible,

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M

MinhT1Answer

Level 15

So long as the home becomes your main home or second home on the day it's ready for occupancy, you can deduct all the interest you paid on the construction loan within 24 months before the home was completed.

The 24-month period can start anytime on or after the day construction begins.

Insurance on the loan is deductible only if it is qualified mortgage insurance.Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006).

Credit card interest is not deductible.

Appliances and other items go in the cost basis of your home and are not deductible.

Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and taxpayer identification number (TIN) on the dotted lines next to line 11. The seller must give you this number and you must give the seller your TIN. A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Failure to meet any of these requirements may result in a $50 penalty for each failure. The TIN can be either a social security number, an individual taxpayer identification number (issued by the Internal Revenue Service), or an employer identification number.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"