I'm holding unimproved land properties for investment purposes and wonder if I could deduct the mortgage interest expenses while I don't make any income from them on Form 1040 Schedule A?
Can I accrue all the previous mortgage interest and expenses until I sell the land properties?
2007-02-08 15:39:13 · 5 answers · asked by Robert W 1 in Business & Finance ➔ Taxes ➔ United States
Only if the land can be classified as a residence. You generally can deduct the mortgage interest for a second residence but raw land does not qualify as a residence.
However, you can deduct investment interest expenses to the extent of investment income derived from the property. Deductions disallowed due to a lack of income may be carried forward to future years and taken against the capital gains ultimately realized on sale.
This is NOT the same as adding the accrued interest to the basis of the property but has the same effect. The difference is a technicality today but future changes to the law could affect the treatment of the interest expense.
See Form 4952 & instructions for further information.
2007-02-08 15:52:18 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 0⤋
No you can't. You can only deduct the mortgage interest on your principal residence and a second home. For land that is held as investment property, the mortgage interest you paid is added to the basis in the property.
2007-02-08 15:46:26 · answer #2 · answered by jseah114 6 · 0⤊ 0⤋
1040 Mortgage Interest
2016-12-17 14:32:35 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Double check (I'm no tax lawyer), but I think you CAN deduct the property taxes, though. http://www.nolo.com/legal-encyclopedia/tax-deductions-vacant-lands.html
2014-01-24 23:12:44 · answer #4 · answered by Marco 2 · 0⤊ 0⤋
you have to carryover the interest until you have investment income
2007-02-08 15:57:16 · answer #5 · answered by Anonymous · 0⤊ 0⤋