Interest paid on a construction
loan
By Bankrate.com
Q.
I
held a construction loan (for construction
of my primary residence) during the first
three months of this year. May I deduct
the interest paid?
Anybody brave enough to bear dealing
with contractors deserves a tax deduction. To qualify as home mortgage
interest, you need to meet the same rules that apply to the general
deduction for home
mortgage interest.
One of the rules requires that the loan
be secured by your primary residence. Since it would be highly difficult
to occupy a home under construction, the law gives you a break.
You can treat a home under construction as your primary or second
home for up to 24 months. This treatment applies if the home becomes
your primary or second residence when it is ready for occupancy.
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