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socrateaser, Lawyer
Category: Tax
Satisfied Customers: 38906
Experience:  Retired (mostly)
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If I borrow money (loan) to buy a lot (real estate) to hopefully

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If I borrow money (loan) to buy a lot (real estate) to hopefully sell for gain in future or keep to 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!

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.
Customer: 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.
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