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Message
Purchased Raw Land - Tax Benefits?
Posted on 2/3/23 at 8:39 pm
Posted on 2/3/23 at 8:39 pm
I'm getting mixed details on if I can claim raw land I purchased last year. The land will eventually be where I build my home but for now it's just land. I did install a well, run power, and have a driveway cut in. From my understanding I can claim the property tax but what about the interest from the mortgage? Anything from the improvements? It's 26 acres and I've thought about harvesting some of the pines in the future but still not sure on that. Some say because it's not an investment property I can't claim anything. Others say that I can only claim depreciation. Just seeing what's the best path here if any.
7
Posted on 2/3/23 at 8:55 pm to GAFF
Set it up as an LLC with a bank account. You can write off anything your imagination leads you to.
When you sell that little bit of timber, and lose money.. you at least tried.
When you sell that little bit of timber, and lose money.. you at least tried.
Posted on 2/3/23 at 9:20 pm to GAFF
Anybody who tells you that land can be depreciated is clueless.
Posted on 2/4/23 at 7:45 am to GAFF
Hire a CPA and then be a gem and report back what they tell you.
From the research I’ve done there’s not much at all you can do, tax shelter wise. On 20 acres, I doubt you can even ever get a timber crew in there.
From the research I’ve done there’s not much at all you can do, tax shelter wise. On 20 acres, I doubt you can even ever get a timber crew in there.
This post was edited on 2/4/23 at 7:46 am
Posted on 2/4/23 at 7:52 am to turkish
quote:
From the research I’ve done there’s not much at all you can do, tax shelter wise. On 20 acres, I doubt you can even ever get a timber crew in there.
This is the correct answer
Posted on 2/4/23 at 7:52 am to GAFF
I’ve never seen a bank that will put an actual mortgage on land. Is it just a loan or is it an actual mortgage that you have?
When I looked into purchasing land and building under one construction loan, the banks I talked to told me I had to take a separate loan for the land, construction loan for the build and then I could mortgage everything together or they told me that I had to completely pay the land first.
When I looked into purchasing land and building under one construction loan, the banks I talked to told me I had to take a separate loan for the land, construction loan for the build and then I could mortgage everything together or they told me that I had to completely pay the land first.
Posted on 2/4/23 at 12:58 pm to Warfarer
quote:
I’ve never seen a bank that will put an actual mortgage on land. Is it just a loan or is it an actual mortgage that you have?
It's a land loan but they sent me a 1098 so that's what started driving my curiosity.
quote:
Anybody who tells you that land can be depreciated is clueless
They were speaking on the improvements on the land. Not actually depreciating the land itself.
This post was edited on 2/4/23 at 12:59 pm
Posted on 2/4/23 at 1:03 pm to GAFF
Land loans do exist. These are different from construction loans.
Curious, OP. What was your quoted rate on the land loan? When did you sign for the loan?
Curious, OP. What was your quoted rate on the land loan? When did you sign for the loan?
Posted on 2/4/23 at 1:33 pm to LSUcam7
quote:
Curious, OP. What was your quoted rate on the land loan? When did you sign for the loan?
Rate was 6.25%. Got the loan in January of last year.
Posted on 2/4/23 at 4:51 pm to GAFF
Solid for land loan. Heck… 30Yr fixed rates were higher just a couple months ago.
Posted on 2/5/23 at 10:12 pm to GAFF
So you are kind of in a no-man's land here.
You can deduct the interest on a first and second home - to the extent total debt doesn't exceed the limits - but this is land, not a home.
You can deduct the interest on investment land - to the extent you have ordinary investment income - but this sound like it's not land held for investment... it's land held for future personal use.
So this ends up similar to personal debt interest.
Banks issue a 1098 generally whenver the debt is backed by real property.
You can deduct the interest on a first and second home - to the extent total debt doesn't exceed the limits - but this is land, not a home.
You can deduct the interest on investment land - to the extent you have ordinary investment income - but this sound like it's not land held for investment... it's land held for future personal use.
So this ends up similar to personal debt interest.
Banks issue a 1098 generally whenver the debt is backed by real property.
Posted on 2/6/23 at 11:07 am to LSUFanHouston
quote:
So you are kind of in a no-man's land here.
anyone know about having land established as a "farm"? In LA.
Trees? Bees/Honey? Does it have to be animals? If so how many?
And what are the actual benefits?
TIA
Posted on 2/6/23 at 11:35 am to Screaming Viking
Need to actually make money three out of five years or it is a hobby.
Posted on 2/6/23 at 12:00 pm to CHGAR
quote:
Anybody who tells you that land can be depreciated is clueless
Yea don't listen to whoever told you that. That's basically accounting 101
Posted on 2/6/23 at 3:40 pm to GAFF
quote:
Purchased Raw Land - Tax Benefits?
quote:
The land will eventually be where I build my home but for now it's just land.
Put a tent up and call it a temporary church.
Posted on 2/6/23 at 4:37 pm to GAFF
The benefit is you get to pay property taxes on it now
Posted on 2/6/23 at 5:09 pm to el Gaucho
quote:
The benefit is you get to pay property taxes on it now
He says he can "claim" those.
I don't understand what that means if it's just an empty piece of land for which he's doing nothing right now.
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