Purchasing raw (unimproved) land can be a great way to get into real estate investing. Raw land is ordinarily cheaper than land with buildings and other improvements.

Moreover, you don’t have the expense of handling building maintenance and other upkeep, not to mention the headaches of dealing with tenants if you rent improved property.

But the tax benefits for owning raw land as an investor are much more limited than for improved property. Some expenses are deductible as itemized personal deductions. Many others aren’t deductible at all. Moreover, if you don’t itemize, you get no immediate benefit from your deductions.

Property Taxes

An investor can deduct property taxes paid on vacant land as a personal itemized deduction on Schedule A. Such taxes should be reported as “Other Taxes” on line 6 of Schedule A.1

This deduction is not limited to the amount of net ... Log in to view full article.