How To Report Purchase of Land?

[akfalk]

We bought a piece of land in 2024. Plan is to eventually build on it in a few years after our kids are out of school (youngest will be entering 6th grade this fall).  Currently, the land is being farmed by a local farmer.  The previous owner had a contract with the farmer for doing this, and we plan to continue letting them farm the property with a contract until we get ready to start building.  So, there eventually will be a very small 'income' from the contract.  How can or should we report all of this purchase?  TIA!

[AmyC]

The purchase of land in itself is not a reportable event. Land is not depreciated. Any mortgage interest would not be deductible at this time.

The income you generate from renting out the land will be reported. You might be reporting the rental income on Sch E. See What is Form 4835: Farm Rental Income and Expenses to help determine which form you will be using.

Reference: 

• About Schedule E (Form 1040), Supplemental Income and Loss 
•  Real estate (taxes, mortgage interest, points, other ... - IRS