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Deductions & credits
Until you put it to use as your primary or second home or as rental property, or sell it, you have an investment property. The carrying costs (e.g. insurance & utilities) of investment property are deductible as investment expenses, but are subject to being a misc. itemized deduction also subject to the 2% of AGI threshold. Real estate (property) tax may be deducted on schedule A, under taxes, without regard to the 2% rule.
Alternatively, 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 2% of AGI rule, but can be capitalized.