Purchased Land in 2022 | What can I write off?

[jamesmbryant]

My wife and I still own our primary home and decided to purchase a piece of property (land) in late 2022. I'm trying to figure out what items from the HUD we are responsible for submitting with our taxes. Are property taxes allowed to be deducted? Anything else?

Note: We paid for the land 100% out of pocket, and a loan was not required.

[Vanessa A · Accepted solution]

You cannot deduct any of the cost associated with the purchase of the property, other than property taxes you were billed for and paid in 2022.  If you paid property taxes that the previous owner was billed for, this would be included in the cost basis of the land and not be deductible for 2022. 

When you sell the land, you will then enter your cost basis (price paid and expenses) as a deduction to the sales price to arrive at your gain on the sale. 

[jamesmbryant]

Thank you very much! 🙂