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Interest paid on a construction loan


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.