On Feb 1, 6:22*pm, ak_...[at]yahoo.com wrote:
- quote -

For equity loans of less than $100K the interest is deductible on
Schedule A BUT gets added back on Form 6251 for the AMT IF the money
was NOT used to improve the property.

Gene E. Utterback, EA, RFC, ABA

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On Feb 1, 10:44 am, eagent <g...[at]alliancetax.com> wrote:
- quote -

Thanks for that and it makes sense. What about deductions for Equity
loan for less than 100K? Is that fully deductible?

========================================= MODERATOR'S COMMENT:
Please try to trim some of the quoted material no longer needed
for your reply. Thank you.

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On Feb 1, 1:27*am, ak_...[at]yahoo.com wrote:
- quote -

use the tracing rules. The limitation says that you can deduct the
interest on no more than $100K equity loan on your schedule A. And
that interest needs to be added back for the AMT calculations.

If you want to deduct interest on MORE than $100K in equity debt you
need to follow the tracing rules. This will allow you to deduct the
interest on the schedule where it belongs. For example, if you took
out a $400K equity loan on your home and you used the money in the
following ways, you'd report the interest as follows:

$100K to fix up your home - this is now converted to acquisition debt
and is fully deductible with no add back for AMT.
$150K to buy a rental property - This goes on Schedule E;
$100K to buy land as an investment - This is investment interest and
is subject to investment income
$50K to put the kid through college - THIS is the ONLY real equity
debt you and is deductible on Schedule A BUT gets added back for the
AMT calculations.

Good luck,
Gene E. Utterback, EA, RFC, ABA

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jan 31, 8:35 pm, ak_...[at]yahoo.com wrote:
- quote -


OK. So I did some research on this forum (should have done it before
posting...but oh well. Live and learn). So from what I understand,
for #1, it is only deductible as investment expense, not as mortgage
interest. For #2, I can deduct as mortgage interest as long as there
is a livable dwelling in 24 months. Am I correct? In either case how
is property tax treated for deduction purposes?

Another thing that I read on this forum was that if I was to take a
second mortgage on my existing home (for abt $400K) and buy the land
(or for that matter to buy land and build a house on it), then I can
deduct the interest on it as mortgage interest. Is that accurate? Or
does the second mortgage have to be used to improve my first home
itself?

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Hi,

I have couple of questions:

1. If I purchase land for investment, is the interest on loan used to
make the purchase, or property tax paid on it deductible for income
tax purposes?

2. If I purchase land for building a second home, and the process for
building the home will take abt 24 months, when can I start deducting
the interest and property tax (if not right from purchase time).

Thanks in advance for any information.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >