interest and taxes on the land

[marinakit]

The t/p has owned unimproved and unproductive land since 2007.
The t/p does not itemize and does not have investment income.
In 2010 she elects to capitalize the interest and property taxes on the land.
The election has to be made on the original return.
What can be done for 2007-2009 (if anything)? Claim investment interest expense carryover and add $500 to the standard deduction?

[rangerj]

Prior to the election the interest and taxes on the land were itemized deductions (investment interest). If she did not itemize then the tax deductions are considered to have been included in the standard deduction and effectively "lost". The investment interest expense does carry forward to be used against future investment income.

[commentator]

In 2009 up to $500 of real estate tax paid could be added to the standard deduction.

[marinakit]

"Prior to the election the interest and taxes on the land were itemized deductions (investment interest). If she did not itemize then the tax deductions are considered to have been included in the standard deduction and effectively "lost"."

She didn't have investment income in 2007-2009, so the investment interest expense could not be included in itemized deductions (if she did she would have had enough to itemize). Can she file Form 4952 for 2007-2009 now and have a carryover? Starting 2010 she capitalizes the interest and taxes.

[commentator]

If she didn't have investment income in a year, the investment interest from that year is carried over whether she itemized or not.

The deadline for amending her 2007 return is today.

[mwcpa]

I agree with commentator and ranger....

no election for 07 to 09 then at best the interest is carried over (form 4952) and may be used when she has investment income and she may have been entitled to the special real estate tax addition to the standard deduction...