Have a 1098 showing mortgage interest which TP states is for land they have bought to build a house on this year. Is this really mortgage interest? All references to mtge int I can find say "secured by your home."
-
-
It should be
considered investment interest until it is the first or second home of the taxpayer.AJ, EA -
If my memory served right, the interest changes it's nature once construction begins. Here are special rules about the construction period, but that is all I know, not looking it up.Comment
-
Vacant land mortgage Interest
The interest can be capitalized and considered part of the cost until the home is completed.
This would be considered carrying charges and an election is made to do this.Comment
-
While on this subject -- Client has 1098 for mortgage interest on an unimproved lot. We use what we can each year as an investment interest deduction on Schedule A, and the disallowed portion accumulates on Form 4952.
My question is this- He pays for grass cutting. Would this be added to basis in the lot, or just disregared as a personal expense? I've never done anything with it, but just wondering if we should be tracking this expense. Thanks!Comment
-
Added to basis
IRC code 266 mentions taxes, interest, and "other carrying charges". I am not sure what these other carrying charges would be but cutting the grass doesn't come to mind.Comment
-
Here the way I was taught.
Carrying charges go on an attached election and are not used currently.
Investment interest can go on a 4952 or be carried (along with taxes and other carrying charges).
Investment expenses to be taken currently that are not carried and are not interest and taxes can only go on Schedule A subject to 2%/JGComment
-
travis bickle's tag line made me laugh out loud!!!!!!!Comment
Comment