cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Level 1

Interest deduction on construction loan

I lived in one house, while building another. I then sold the old house and moved into the new one in October. Can I deduct the interest on the construction loan while my new house was being built?
1 Best answer

Accepted Solutions
Employee Tax Expert

Interest deduction on construction loan

Yes you can deduct the interest on your construction loan if the loan was secured by the property you moved into. 

You can treat a home under construction as a qualified home for a period of up to 24 months, but only if it becomes your qualified home at the time it is ready for occupancy. The 24-month period can start any time on or after the date that construction begins.

See page 4 under Qualified Home and Home Under Construction: https://www.irs.gov/pub/irs-pdf/p936.pdf

1 Reply
Employee Tax Expert

Interest deduction on construction loan

Yes you can deduct the interest on your construction loan if the loan was secured by the property you moved into. 

You can treat a home under construction as a qualified home for a period of up to 24 months, but only if it becomes your qualified home at the time it is ready for occupancy. The 24-month period can start any time on or after the date that construction begins.

See page 4 under Qualified Home and Home Under Construction: https://www.irs.gov/pub/irs-pdf/p936.pdf