Can I deduct HOA fees & Taxes for investment property.

[astridwilson]

The land is raw land.  Will not be rented.  It sits in front of my vacation rental property.  

[leeloo]

While property taxes are deductible for any number of properties, HOA fees are not deductible unless the property is used for production of income.

[astridwilson]

So, is it a stretch to say that the land enhances the Vacation rental and therefore produces income?

[Mike9241]

if the land enhances the value then the rent charged should reflect (higher) the enhanced value.

[Carl]

You say the land "sits in front of" your vacation rental property. To me, that indicates that it's across the street from the property and "could" puts it's investment use in question for all I know.

If the land is available for the exclusive use of your short term tenants, and is specified as such in the rental agreement, then you can include the property taxes, HOA fees and mortgage interest on the SCH E. But being across the street (assuming my assumption is correct) the only way I would see it as useful for short term tenants, would be for something like vehicle parking.

Otherwise, the property is personal use and you can only deduct property taxes and mortgage interest (subject to SALT limits) as a SCH A itemized deduction.

[Critter-3]

Even if you wanted to or could  consider the land part of the rental  LAND is a non depreciable asset so there is nothing to deduct or depreciate of the purchase cost. 

[astridwilson]

The land is not across the street.  It is literally just in front of the rental house, so house, land and then ocean. The land is unbuildable but purchasing the land ensures the view and ensures the rental success. 

[leeloo]

No. The land is personal use unless you collect income from the use of the land.

[Anonymous_ · Accepted solution]

The land does not appear to be property held for personal use and, at least, should be considered to be held for investment purposes.

Further, since the land is adjacent to the rental house, it could be considered part of the total rental property and, if so, any HOA fees (that do not include fees for improvements) could be deducted as rental expenses.

Frankly, I would suggest that you seek guidance from a local tax professional who can actually review the exact layout of the property and exactly how you are using (including advertising, etc.) the rental property.

[Opus 17]

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@astridwilson wrote:

The land is not across the street.  It is literally just in front of the rental house, so house, land and then ocean. The land is unbuildable but purchasing the land ensures the view and ensures the rental success. 

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I agree in suggesting local professional advice.

Carrying expenses for personal property are never deductible.

Carrying expenses for investment property are deductible against investment income.  If there is no income, you may be able to capitalize your carrying costs (that means adding them to your cost basis, which reduces your capital gains when you later sell).  However, there is some dispute over whether capitalizing carrying costs is allowed for tax years 2018-2025 due to changes in the TCJA.  (If nothing new changes, carrying costs will be deductible or capitalize-able starting in 2026).

It's clear this is not a traditional investment property since you don't intend to build on it or sell it.  However, I agree with the suggestions of other that you might be able to include this as part of your rental property for the reasons you described.  So I agree with the recommendation to talk to a local professional.