Tax write offs for vacant land?

Question

If you purchase a lot with the intention of building a rent house on it can you write off any of the taxes or maintance (lawn mowing) or driving to the property to make sure no one is dumping or squatiing on it?

Steven Hamilton II · Answer

@Jerry D,

You can deduct the property taxes on Schedule A; however, you cannot deduct the maintenance. It will be added to your basis until you build a property on it.

Investment interest is deducted on Form 4952 and is limited to your investment income in any year.

-Steven

Jerry D. · Answer

Another article I found that said you can do it one of two ways.

http://www.inman.com/2013/06/21/benefit-from-tax-deductions-on-vacant-land/

Jerry D. · Answer

I found this online. Doesn't make it true but it says you can deduct it off of other income?

http://homeguides.sfgate.com/write-off-vacant-land-34144.html

Jerry D. · Answer

Ok thanks. So as long as it isn't generating any income I can't write off anything. But when I got to develop it or sell it later I can then use those expenses. If I am reading that right. Thanks for the help

Bob Shome · Answer

If it is vacant unproductive land (i.e. you are getting any money from it) then no you can not currently deduct any expenses.  You must file an election to capitalize the expenses and add them to the basis of the land.

Disclosure:  seek you own tax advice.  I am a CPA but I am not providing you tax advice.

Jerry D. · Answer

What about financing it? Can you write off the interest?

Seth Williams · Answer

I'm no tax expert @Jerry D. , but I can't see why any of that would be a problem. Seems pretty reasonable (as long as it's not excessive to the point of being suspicious).