topic Re: Deductions in Deductions & credits

Deductions

dkenedy1 — Fri, 23 Oct 2020 15:12:13 GMT

I have several vacant lots, that I need to enter taxes and maintenance paid, where should I put that, I have in years past but can not find it on 2019

Re: Deductions

Critter-3 — Fri, 23 Oct 2020 15:47:47 GMT

Only the RE taxes can be deducted on the Sch A (if you can itemize deductions AND it is not subject to the SALT limitations) on vacant lots that are not rented or used in a business. Total up the RE taxes paid and enter them in the deductions and credits tab under your home ... property taxes ... additional land ...

Re: Deductions

Opus 17 — Fri, 23 Oct 2020 16:52:47 GMT

All real estate taxes you pay on any land you own can be deducted as an itemized deduction on schedule A, but subject to the $10,000 cap on all state and local taxes.

If you are holding land for investment purposes, you can generally only deduct your maintenance costs against income the land produces. Since the land is vacant and not producing income, you may have the option of capitalizing your costs. This means adding your costs to your cost basis. This does not result in an immediate tax deduction, but reduces your capital gains when you sell. To do this, you must attach a written statement to your tax return each year. You can capitalize your maintenance costs as well as property taxes that you can't deduct on schedule A due to the $10,000 cap. You may want professional advice. More information is in chapter 7 here, https://www.irs.gov/pub/irs-pdf/p535.pdf

Previously, there was an itemized deduction on schedule A for miscellaneous expenses, subject to the 2% rule, and one of the deductible expenses was costs associated with holding investments. The miscellaneous itemized deduction was eliminated by the 2018 tax reform act.

Re: Deductions

Opus 17 — Fri, 23 Oct 2020 16:54:11 GMT

@Opus 17 wrote:

All real estate taxes you pay on any land you own can be deducted as an itemized deduction on schedule A, but subject to the $10,000 cap on all state and local taxes.

If you are holding land for investment purposes, you can generally only deduct your maintenance costs against income the land produces. Since the land is vacant and not producing income, you may have the option of capitalizing your costs. .

I should add here that if you are holding the land for personal reasons (such as to build a vacation home in the future) then your carrying expenses may not be capitalized. You can only deduct the real estate taxes up to the cap.