In 2021, construction began on a secondary home in a different state than the one in which I live. I do not have a primary home, but am a renter. Tax implications?

Construction, due to supply line issues, is still not complete in 2022, but will be (probably in March or April). What are the tax implications of building a secondary home (when I do not own a first, but am renting)? Can any of the expenses, including Builders Risk insurance or, shortly, homeowners insurance, be a deduction? Thank you for any help here

415

Expert Alumni

Feb 19, 2022 6:25:27 PM

You may deduct the construction loan interest for your second home so long as the home becomes your main home or second home on the day it's ready for occupancy. You can deduct all the interest you paid on the construction loan within 24 months before the home was completed.

The other expenses Builders Risk insurance or, shortly, homeowners insurance, can not be deducted.

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In 2021, construction began on a secondary home in a different state than the one in which I live. I do not have a primary home, but am a renter. Tax implications?