In order to deduct your ground rent on leased land, you must first meet the following tests:

• The ground lease is for at least 15 years, including renewal periods,
• The land lease is freely assignable to the buyer of the home,
• The land owner's interest is primarily a security interest (similar to a mortgage), and
• You have a current or future option to buy the land beneath your home.

If your situation meets all of these tests, your ground rent payment to the landowner is tax-deductible as an interest expense.

Go to Internal Revenue Code Sections 26 U.S. Code § 163 - Interest and 26 U.S. Code § 1055 - Redeemable ground rents for additional information.

To report the tax-deductible ground rent payment (if you need help reporting this, go to our Mortgage Interest - Not on Form 1098 FAQ):

1. From within your Form 1098, on the screen titled Mortgage interest not reported on Form 1098, click the data entry field below Deductible mortgage interest, and type the amount.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.