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New Member
posted Jun 4, 2019 5:59:07 PM

Is a property loan considered a mortgage

we received a 1098 form but I'm not sure if its considered a mortgage since there are no buildings on the property

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New Member
Jun 4, 2019 5:59:08 PM

Any interest an investor pays on money borrowed to purchase vacant land is investment interest that can be deducted as an itemized personal deduction. However, the annual deduction for investment interest is limited to the investor's net investment income for the year. Any excess is carried over to future years. You determine the amount of your net investment income by subtracting your annual investment expenses (other than interest expenses) from your investment income.

Example: George purchases a vacant lot on which he pays annual property taxes of $1,000 and interest of $2,000. His only other investment is a savings account which earns $2,000 in annual interest. His net investment income is $1,000 ($2,000 interest income - $1,000 property tax expense = $1,000. Thus he may deduct only $1,000 of his interest expense. The excess $1,000 is carried over to future years.

An investor can also deduct property taxes paid on a vacant land as a personal itemized deduction on Schedule A. This deduction is not limited to the amount of net investment income.