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If I borrow money (loan) to buy a lot (real estate) to hopefully

sell for gain in future...
If I borrow money (loan) to buy a lot (real estate) to hopefully sell for gain in future or keep to build...do I qualify for the "Investment Interest Expense Deduction" (Form 4952) to deduct the paid interest on the loan? I am not producing income on this empty lot but could sell in future.

Thank You!
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Answered in 13 minutes by:
6/30/2013
socrateaser
socrateaser, Lawyer
Category: Tax
Satisfied Customers: 39,498
Experience: Retired
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Hello,

Unless you have rental income against which to expense the rental interest, you cannot deduct the investment expense. IRC 469; IRC 163(d).

Hope this helps.
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Customer reply replied 4 years ago

So what you're saying is...I have to have income from that lot/real estate which is at least greater than the interest paid on the loan?


 


...if no income generated then it does not qualify - even if I wish to sell the lot later it still would not qualify as an "investment property"?

You need investment income from some source. You could use bank interest or securities dividends. But, no income means no deduction.

Hope this helps.
socrateaser
socrateaser, Lawyer
Category: Tax
Satisfied Customers: 39,498
Experience: Retired
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