Investment property sale - how to deduct mortgage interest

Yes.

This would be investment interest expense, and would be deductible as an itemized deduction. Investment interest deductions are limited to investment income.

To report the investment interest expense, go to:

1. Go to the Federal Taxes category in TurboTax.
2. Go to the Deductions and Credits subcategory.
3. On the screen that lists "Your Tax Breaks" scroll down to find the section labeled "Retirement and Investment".
4. Click start on the line labeled 'Investment Interest Expenses"
5. Answer yes, to the question "Do you have 2016 investment interest expenses or 2015 carryovers?"
6. Enter a description "mortgage interest on investment property" and the amount from the 1098 related to this piece of land.
7. Continue through the screen labeled Investment Expenses.
8. If there are any of the listed types of investment income on the screen labeled "other investment income" list those items. Otherwise continue.
9. On the screen labeled "Net Capital Gains" (assuming there was a gain on the sale). Click "Learn More" on the second screen to determine how you need to answer the question labeled, "Did any of the gains result from the sale or disposition of non-investment property?"
10. If you answer no, enter 1,000 dollars on the screen labeled "Maximum Investment Interest Deduction" to elect to treat some of your gain as investment income for the deduction. Enter an amount up to the total interest expense or the capital gain income.