Can I deduct the interest shown on Form 1098 for my undeveloped property with a mortgage? It's for personal use, no income derived from it.

[fiddler21]

The property is wooded and part of an AFD (Agriculture and Farming District).  There are no structures.

[KrisD · Accepted solution]

No, I'm afraid not.

According to the IRS:

"For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.

The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment, or other deductible purposes. Otherwise, it is considered personal interest and is not deductible."

If you took a "Home Equity" loan out on your primary home and paid off the loan on the property, the interest on the home equity could be deductible if:

"Mortgages you (or your spouse if married filing a joint return) took out after October 13, 1987, that are home equity debt but that are not home acquisition debt, but only if throughout 2016 these mortgages totaled $100,000 or less ($50,000 or less if married filing separately) and totaled no more than the fair market value of your home reduced by..." (any outstanding mortgages).

For more detailed information, please click the link below.

CLICK HERE for IRS information on the home mortgage interest deduction