Q:Can I deduct the interest and property tax incurred to acquire a vacant land? A: Generally speaking, no. First point I need to clarify is that we are talking about business activity. ie. both interestand property tax are paid for the purpose of gaining or producing income from a business or property with respect to the land acquisition. Otherwise, neith interest nor property tax can be deducted and it's the end of the story. If you are in the business, bad news is you maybe still able to deduct any interest expense or property tax for the acqusition and holding of VACANT land unless you generate certain income FROM THE LAND. Any excess of expenses will be denied. Don't worry. For denied excess interest or property tax due to SS18(2) and SS18(3), they can be added back to the cost of vacation land per 53(1)(h) or ss10(1.1) so that future captial gain or business income can be reduced. In addition, if you are running 'principal business' corporation. in other words, business is to lease, rent or sell real properties or for the development of real properties for above purposes, your deductible amount can be further increased by amount called based level deduction, which is computed by multiplying prescribed rate with $1M or approximately $80K to $100K assuming 8% to 10% prescribed rate.