@astridwilson wrote:
The land is not across the street. It is literally just in front of the rental house, so house, land and then ocean. The land is unbuildable but purchasing the land ensures the view and ensures the rental success.
I agree in suggesting local professional advice.
Carrying expenses for personal property are never deductible.
Carrying expenses for investment property are deductible against investment income. If there is no income, you may be able to capitalize your carrying costs (that means adding them to your cost basis, which reduces your capital gains when you later sell). However, there is some dispute over whether capitalizing carrying costs is allowed for tax years 2018-2025 due to changes in the TCJA. (If nothing new changes, carrying costs will be deductible or capitalize-able starting in 2026).
It's clear this is not a traditional investment property since you don't intend to build on it or sell it. However, I agree with the suggestions of other that you might be able to include this as part of your rental property for the reasons you described. So I agree with the recommendation to talk to a local professional.
