Land Loan Interest

[kl9]

Does anyone know whether interest paid for a mortgage on land is tax deductible? I believe there is a different between an investment property and a recreational property and how these are treated tax-wise. I live in WI by the way. Thanks for any advice!

 

[bueller]

No for vacant recreational property. If your loan is secured by a "home" on the property then you can deduct the interest paid.

 

[Bill]

Don't take my word for it talk to an accountant.
Typically no you can't unless it's attached to the land you have your home on currently or you plan to build real soon.

If there is enough equity in your current residence a second mortgage on it to pay for the land would be tax deductible Federally.
I can't speak for your state.

All real estate taxes are deductible regardless of where you live. Again, Federally.

 

[bwoods11]

If there is Ag or CRP income you can write it off yes.

 

[buckdeer1]

In these days there is almost always some kind of CRP program that pays.These can have a lot more benefits than just the CRP payment.Where I live in Kansas I have been able to get several properties out of recreational by either planting walnut trees,which is main lumber tree in area.Showing past timber harvest as it's a crop just not one harvested each year,doing CRP projects,It is even worth it to bale NWSG sometimes to change to crop history.

 

[kl9]

If there is Ag or CRP income you can write it off yes.

So if we are getting tillable rent income from the property, we can write off all of the interest expense we pay annually?


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[bwoods11]

I'm going by what we do. I have farms in MN and Iowa. My Father-in-law is an accountant and knows taxes to the point of annoyance.

We write off interest on the land loan, improvements, property taxes, maintenance such as CRP mowing. Mileage to and from the farm for maintenance, and that can be be a decent chunk if it's 4-7 hour drive.

It all adds up!! I believe timber/timber income should be in same category.

 

[kl9]

Is farming your primary source of income though or do you own these farms and are employed in some other manner?

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[bwoods11]

I'm self employed. 80% of my income is from my small business. The balance is from cash rent and CRP from my farms.

Size of operation should not matter.

 

[kl9]

I'm self employed. 80% of my income is from my small business. The balance is from cash rent and CRP from my farms.

Size of operation should not matter.

Thanks for all the help! I got one more question... You do this for farms in both IA and MN correct?


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[bwoods11]

Thanks for all the help! I got one more question... You do this for farms in both IA and MN correct?


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Yes..do you get income from your farm? If you do you get a 1099. Then fill out income and expense chart.