Where to Enter purchase of Vacant Land?

[MoneyBorg]

I use 2019 Home and Business.  I purchased two investment vacant lots in 2019 for cash.  I believe that I can deduct the property tax and mortgage (not applicable since it was cash purchase) if I itemize in 2019, or I can utilize a Section 266 Election and include a statement in my tax return declaring costs incurred to increase cost basis of the property and I further understand this can include property maintenance costs such as mowing in the basis.

In either case for recording and historical purposes at least I wished to add the property to my investments so that the Section 266 Statement could refer to it.

Unclear the process to do this, does not seem I can add it under rentals since I will not be renting it but instead will be selling it in a few year.  Can anyone point out how I should do this?

[Carl]

In most cases, since you're only going to hold it for 2-3 years, it's best to not report anything (not even the purhcase) until the tax year you sell. Then in that year you'll show your cost basis and everything else (amost) is your carrying costs on the investment.

Do note however, that claiming lawn care on vacant property, even if held for investment purposes, has a tendency to raise flags with the IRS. I would recommend you "let it go" until you are actually ready to sell. Then your cost to clear the land and clean it up can be dealt with in serveral ways.

 - It could qualify as a property improvement, thus adding to the cost basis.

 - you could claim it as a sales expense.

 - You could claim it as carrying costs.

If you want option #1 or #2, then you'll need to claim the property taxes in each tax year you pay them.

[MoneyBorg]

I agree with your assessment, I plan on adding them to the cost basis for property.  My understanding it that I simply need to an Section 266 Election statement for those costs for each tax year. That is how I handled it.  Thanks for your feedback.