Yes, you can deduct the interest. You can treat a home under construction as a qualified home for a period of up to 24 months, but only if it becomes your qualified home at the time it is ready for occupancy.
The 24-month period can start any time on or after the day construction begins.
To enter the interest on a construction loan in TurboTax, start by entering the information as though you received Form-1098:
- Under the Federal menu, choose Deductions & Credits
- Expand the menu for Your Home
- Click Start/Revisit next to Mortgage Interest and Refinancing (Form 1098)
- Enter the lender information
- On the following screen, choose The seller is financing this loan and we didn't receive a 1098
- Complete the information on the screens that follow
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