construction loans
interest on construction loans is qualified residence interest if the following requirements are met (but are subject to the qualified residence interest rules)
1) a home under construction is treated as a qualifying home for up to 24 months provided that when ready for occupancy, the house is used as a main or second home.
2) if the construction period exceeds 24 months, the interest for the additional months is considered personal interest
3) loan proceeds must be directly traceable to home construction expenses, including the purchase of the lot
4) before construction begins, the loan does not qualify as acquisition debt and interest incurred during that period is generally treated as personal interest
5) 90-day rule. a loan incurred within 90 days after construction is complete may also qualify to the extent of construction expenses made within the period starting 24 months before completion of the house and ending on the date of the loan
5) rephrased - Debt incurred after the residence or improvement is complete, but no later than the date 90 days after such date, may be treated as being incurred to construct or improve the residence to the extent of any expenditures to construct or improve the residence which are made within the period beginning 24 months prior to the date the residence or improvement is complete and ending on the date the debt is incurred.
