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dkenedy1
New Member

Deductions

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

3 Replies
Critter-3
Level 15

Deductions

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 ...

 

 

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Opus 17
Level 15

Deductions

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. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Opus 17
Level 15

Deductions


@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.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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