Hal_Al
Level 15

Deductions & credits

Yes, but you needed to make that election each year.

Taxpayers can elect to capitalize (add it to your cost basis)  the carrying costs of unimproved and nonproductive real property, real property under development or construction and personal property before its installation or use (Regs. Sec. 1.266-1(b)(1)).  The election is made with the tax return by its due date, including extension, by attaching a statement. You cannot wait until you sell the property, but must make that election each year. Attach the statement to the return and write “Filed pursuant to section 301.9100-2” on the statement. 

Mortgage interest is only deductible to the extent of other investment income and not subject to the old 2% of AGI rule,  but can be capitalized.  Real estate (property) tax may be deducted on schedule  A, under taxes, without regard to the 2% rule.

Prior to 2018, carrying costs could alternatively be deducted as investment expenses, a misc. itemized deduction subject to the 2% of AGI threshold. So, filing an amended return for 2017 is an option.