*Loan,banking and credit>>>tax advice

Tax advice ... land contract interest?

How should I have handled land contract interest from a vacant land purchase (Sched A, Inv Exp)? I sold the property in 06' and realized the capital gain.

If the land was an investment, then you get to enjoy taxation on the capital gain.

All of the amounts that you RECEIVED (including cash, debt relief, and other items) represent the total value that you sold the land for.

All of the amounts that you PAID (including the same items and debts you incurred) represent the total value you paid.

The difference between the two is your gain. Time for Schedual d.

If you earned interest, you should have reported it on schedual b seperately. If you paid interest, I don't think it's deductible unless it's interest on your private residence or second home.

It depends in what manner you owned/operated the land. Did you operate the land as a business or as an investor?

If you owned the land as a business, you would have been able to deduct the interest on the financing as an ordinary business expense,

Whereas, if you owned the property as an investment, the interest expense is subject to investment income limitations (Form 4952) and itemized deduction
limitations based on Adjusted Gross Income.