Interest on Construction Loan for new Home

cpb213 · ‎January 30, 2025

Hello,

My Wife and I are building a new home with a construction loan. Construction started in May of 2024 and the home will be completed in May 2025. It's my understanding is that we can deduct the interest from the loan on our taxes. We have been paying interest on the loan all year. Can we claim all the interest we paid on the loan (2024 & 2025) in next year's taxes (2025 filing) or do we have to claim some of the interest in 2024 and the remainder in 2025?

KrisD15 · ‎January 30, 2025

You claim the interest paid in the year you paid it, so the interest you paid in 2024 goes on the 2024 return and interest paid in 2025 gets reported on the 2025 return.

You are allowed to claim interest on a house under construction for 24 months before it needs to be ready to be occupied.

IRS Pub 936

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