Income Tax Credits for Owning Land

There are more benefits to buying land for sale than you might have heard about. Most people know that you can deduct the interest on their primary residence home mortgage from your federal income tax bill. What you might not know is that you can also get tax credits for owning just the land.

When you are paying a debt on land you own, you will get a 1098 form at the end of the year stating how much money you paid in interest. That figure can be used in figuring your tax credit for owning the land and paying a mortgage on it. If you paid for mortgage insurance, that will also be on the form, and you can deduct that too.

Even if you have paid off the land and get an equity loan on it, the equity loan interest is also tax deductable. Sometimes it is advantageous to borrow on your land rather than take money out of a retirement fund when you need cash, simply because the tax credit works to your advantage so well that it overcomes the interest you have to pay.

There are other forms of tax credits for owning land as well. If you own timberland, there are tax credits you can take that are designed to protect the nation’s forests. You can plant new trees to replace trees you lost, and you can get a reforestation tax credit.

In the farmland sector, there are some tax credits for owning land too. If you own land, you can set aside easements to the government for conservation purposes. If you set aside a portion of your land for conservation uses, you can get a tax credit based on the value of that land. Many farmers like to do this because it gives them some extra cash and costs them little; especially with the new higher rates they are being given. If the amount of credit due them exceeds their tax liability, they are given a cash payment of the difference between the two.

When all is said and done, tax credits offer just one more reason to buy land for sale. You get to own the land, control it, sell it when you want to, and get the profits from the sale. At the same time, you can earn tax credits to offset your individual income tax.