Construction Loan Mortgage Interest Deduction

[minordilemma]

Background: I have never owned a home

In summer of 2018 i acquired a piece of land with a lot loan (1 form 1098).  In 2019 i converted that lot loan into a construction loan with a second bank and began construction of my primary residence (2 form 1098's).  In summer 2020 the construction was complete and the loan was sold to a new bank as permanent financing (2 form 1098's).

In 2018/2019 i filed for standard deductions ignoring the interest i had been paying.  My questions is for my 2020 tax filing, can i deduct the mortgage interest i paid on these loans in 2018/2019/2020 (for the 2 year period the house went from land to primary house) ?  I understand all of this is deductible, but its unclear if its deductible all in 2020, or if it would have been deductible in the years the interest was paid.  i.e. would i have had to have claimed the 2018 form 1098 interest on the 2018 tax return etc..... or can it all be claimed in bulk now for the three years on my 2020 return?

[JohnB5677]

No, you cannot include interest from 2018 & 2019 on your 2020 tax return.  Any income or deductions have to be posted to the year that they apply to.

I suggest that you complete your 2020 taxes (utilizing only 2020 deductions) and see if you qualify for Itemized Deductions.  The Standard Deduction is $12,400 for Single and $24,800 for married.  Your Itemized deductions must exceed that level to make it worthwhile.

If you do qualify for Itemized deductions in 2020, I suggest that you go back and amend you previous returns.

Some quick ground rules:

1. Be sure the original return was filed and accepted.
2. DO NOT go back into the return or change anything before you start the amendment process.
3. Gather everything you need before you start.
4. Complete the entire amendment process before you log out.
5. Starting with 2019 tax returns you can E-File a 1040-X amended tax return.  All prior years must be printed and mailed.

You can correct a return that you've already filed and had accepted.  Select the year that applies and use this guide to proceed.

Select your tax year for amending instructions:

• 2020
• 2019
• 2018
• 2017

For additional information please refer to  How to Amend