Is it possible to get tax exemption in US for LAND Mortgage – House is not yet constructed?

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My friend has a Land Loan (the only loan he has – loan taken to buy the land but house is not yet constructed ) from a bank in INDIA.He is working here on H1. He doesn’t have any loans here in US. The bank in INDIA has all rights to sell the land and recover the loan amount if failed to repay.

Can he get a tax exemption here in US?

  1. Reply
    Judge Julie
    January 31, 2011 at 4:32 am

    No – he cannot deduct interest or get a tax exemption for buying a lot in USA. Only a lot w/house qualifies for any kind of interest deduction.

  2. Reply
    Bash Limpbutt's Oozing Cyst©
    January 31, 2011 at 4:33 am

    Mortgage interest is only deductible on a primary and second home. Raw land isn’t a home so the mortgage interest isn’t deductible.

    Interest on money borrowed for investment is deductible but is limited to the gain on the investment. He’d add the interest to the basis in the land and that would reduce the gain when he sold the land. If he converts it to personal residential use by building a home on it, his basis would be the purchase price of the land plus the interest paid through the date that the certificate of occupancy is issued and he moves in, plus the cost of construction. From that date forward, the mortgage interest would be deductible on that loan and any other mortgage loans that he took out to build the home.

  3. Reply
    the tax lady
    January 31, 2011 at 4:36 am

    How many times are you going to post this question and change the facts?

    First you asked (twice) if YOU could deduct mortgage interest.
    Then you added more information to say it wasn’t a house, but land only.
    Now you are posting that it’s not you, but a friend.

    WHO is it? And will you finally post all of the facts in one question???

    A loan for land is NOT a home.

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