Interest deduction on construction loan

9 replies
165 views

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?

TurboTax Self Employed Online

IsabellaGAnswer

Alumni - Intuit

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

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

IsabellaGAnswer

Alumni - Intuit

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

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

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

ckellerman01

Level 2

We paid interest on a construction loan last year and I was curious where I report that on my taxes? The bank sent me a statement showing how much interest we paid but it is not a 1098, so I don't really know where I document it on my turbo tax forms. Thanks for your help

RobertG

Alumni - Intuit

You don't need Form 1098 to report mortgage interest.

As long as you have the information you need, you can enter the mortgage interest into TurboTax.

You can get your mortgage info by going to your lender’s website. Other documents, like your monthly mortgage bills and your Closing Disclosure (or HUD-1), will also have some of this info.

Aside from the amount of interest you will need to know the:

Outstanding mortgage principal as of 1/1/2019
Mortgage origination date
Mortgage acquisition date

@ckellerman01

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

JTong

Level 2

Where within TurboTax would you enter this construction loan interest? My financial institution sent me a 1098 but left out the mortgage principal amount. Would I enter the total loan amount (even if such total amount has not been disbursed by the end of 2019) or just the amount disbursed in 2019?

KarenM90

Level 11

Yes, the construction interest should be calculated on the amount dispersed. So the mortgage principal amount, as of the date requested, is the amount you would use for the mortgage principal amount.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"