I bought some land during the summer of 98 for the construction of a home for my parents. During the remainder of the year of 98 nothing was done to improve the land. My parents sold their home in the summer of 99 to finance the new home. By the fall of 99 in November I paid to have the land cleared for the home and for a road to it. My parents got a mortgage for the home with a construction loan in the fall of 1999. The mortgage for the land had to be refinanced and a different mortgage company was used to finance both the land and home with a combined construction loan and mortgage. A house was placed on the property on January 2000. The home is just about completed as of April with me paying for land improvements such as installing the septic system, gravel for road, and a water line to the home. In the Mortgage paper work drawn up by the lawyer I will own 50% of the home. My plan is to make the payments for the land with my parents paying the remainder of the mortgage for the home. My question is that I want to know if I can use the mortgage interest deduction for 1999 and could I have used it for the 1998 tax year. I would like to know whether I can use the mortgage deduction prior to the home being built for 1999 and for 1998. Since the home has been built within the 2 year construction time period I believe it is correct to use the mortgage deduction. Would it only be correct to use the investment deduction for the land for 1998 and 1999? Also, for my year 2000 taxes how should I handle the mortgage interest deduction? Should I use the 50% mortgage deduction from the 50% split with my parents? I would like to be fair with regards to my parents paying the largest percentage of the mortgage and giving them the greatest tax deduction as compared to the deduction for my smaller payments on the land. How should I figure this out? I know this is a long message, but it is a bit complicated!Thanks to all for any help,Mike
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