Securities Backed LOC Interest

[Card59]

I am building a house using a SBLOC that will be my primary home. Can I deduct the interest given the purpose of the loan? I had a mortgage but sold the house in June while the SBLOC is used for the construction of the house.

[DavidD66 · Accepted solution]

Yes, you can deduct the interest.  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 day construction begins.

To enter the interest on a construction loan in TurboTax, start by entering the information as though you received Form-1098:

1. Under the Federal menu, choose Deductions & Credits
2. Expand the menu for Your Home
3. Click Start/Revisit next to Mortgage Interest and Refinancing (Form 1098)
4. Enter the lender information
5. On the following screen, choose The seller is financing this loan and we didn't receive a 1098
6. Complete the information on the screens that follow

[Card59]

Thank you for the quick reply, very helpful. Will follow these steps.

[Mike9241]

two caveats.

1) loan proceeds must be directly traceable to home construction including the purchase of the lot

2) interest incurred before construction begins is treated as personal interest. personal interest is not deductible.