topic Vacant land interest deduction in Get your taxes done using TurboTax

Vacant land interest deduction

hpycmpr23 — Sun, 17 Feb 2019 19:07:45 GMT

Is mortgage interest on my vacant land located adjacent to my primary residence deductible?

Re: Vacant land interest deduction

PaulaM — Mon, 18 Feb 2019 14:49:46 GMT

No, if you hold the land for personal use the mortgage interest is not deductible.

Re: Vacant land interest deduction

p-hoard — Wed, 05 Feb 2020 16:46:31 GMT

Paula. Does this mean I do NOT enter the 1098 form for a mortgage on land? The walk thru just says enter 1098 forms, doesn't specify. But if I do enter it it seems to be deducting it.

Re: Vacant land interest deduction

JamesG1 — Wed, 05 Feb 2020 17:53:40 GMT

It depends. See the IRS FAQ below addressing whether the interest can be deducted as mortgage interest as your first or second home.

‘Question - I have a mortgage for land that I intend to build a home on. Can I take the home mortgage interest deduction?

Answer - No, you can't deduct interest on land that you keep and intend to build a home on. However, some interest may be deductible once construction begins. 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's ready for occupancy. The 24-month period can start any time on or after the day construction begins. As a qualified home, the interest paid may qualify as deductible mortgage interest, with certain limitations.’

If the lot is being held for investment purposes, you can deduct the interest only to the extent that you have investment income. See here.