The real estate taxes are deductible on Schedule A (itemized deductions), regardless of how the land is used.
Until you put it to use as your primary or second home or as rental property, or sell it, you have an investment property. Real estate (property) tax may be deducted on schedule A, under taxes. Mortgage interest is only deductible (on schedule A) to the extent of other investment income (interest and dividends) and not subject to the old 2% of AGI rule. Other carrying costs (insurance, maintenance, etc.) of investment property are not deductible, staring with tax year 2018.
Alternatively, taxpayers can elect to capitalize (add it to your cost basis) the carrying costs (including mortgage interest) 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. You may add the carrying costs, incurred in the year of sale, to your cost basis.
