topic Is mortgage interested deductible if we bought land with a house to start a farm? in Deductions & credits

Is mortgage interested deductible if we bought land with a house to start a farm?

computerwizard1 — Sat, 01 Jun 2019 07:35:37 GMT

My wife and I purchased a home with 20 acres and 3 large out buildings (barns,etc). The plan was always for her to start her vegetable/meat producing farm that she has been prepping to start. She has already setup her LLC. My question: is the percentage of the mortgage interest that the farm land and outbuildings occupy deductible on the schedule f? Eg., can I put 25% on our joint 1040 and 75% on the schedule f as a business expense?

Yes. You may deduct the portion of your mortgage interest...

JulieR — Sat, 01 Jun 2019 07:35:38 GMT

Yes. You may deduct the portion of your mortgage interest that covers the land on Schedule F. The remainder gets deducted on Schedule A. A good method to determine how much interest to allocate to the farm is to apply the percentage your county tax assessment lists as the portion of your property value that is for the land to the total mortgage interest reported from your lender. You can make an adjustment to the percentage for the land you home actually occupies, if necessary.