tax deductions on vacant land

[landlubber]

If you own non income producing vacant land, how do you report your purchase and maintenance costs on your tax return, Each year or as part of the cost basis when sold?

[DavidD66]

You don't report the purchase of vacant, non income producing property on your tax return.  You can deduct the property taxes on Schedule A (subject to the cap on state and local tax of $10,000).  You can also make an election under IRC Section 266 to capitalize (add to your basis) all carrying charges such as real estate taxes and mortgage interest that would otherwise be deductible.  

A taxpayer who owns unimproved and unproductive real estate can elect to capitalize annual taxes, interest on a mortgage, and other carrying charges.

• The election must be made annually.
• The election requires a statement in the taxpayer's return describing the property and the expenses to which the election applies.
• If the property produces income in a given year, the election isn't available.

TurboTax does not support this election.  If you are using TurboTax Desktop, you can open a blank form in the Forms mode and type in your election.  

[Mike9241]

holding raw land as an investment is an activity under IRC 212, so property taxes paid on such an investment are deductible on schedule A without regard to the $10,000 aggregate limit under IRC 164(b)(6).

if it is investment property, interest on debt on the property is subject to investment interest limitations schedule A form 4952.

other expenses are not deductible nor add to the basis of the property.