Can You Deduct Interest You Are Paying On Land?

Michael Lodge

by Michael Lodge

Clients that have purchased land to build their castle on present us with the question on the deduction that can be taken on their purchased land.

Question: I have a mortgage for land that I intend to build a home on. Can I deduct the interest for the mortgage?

Answer:

You cannot deduct interest on land that you intend to build a home on, but some interest may be deductible when construction begins. 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. As a qualified home, the interest paid within certain limitations may qualify as deductible mortgage interest.

Tax questions?  Call 877.778.1770