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?
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