I have a client that owned 4 lots, lot number 4 had his primary resident on it. The trailer was destroyed in 2005.  Because prices had bottomed out he has held the property since then. He has had the property on the market almost constantly since 2015. He combined 3 lots and sold them in 2020, for a profit. Lot 4 (homesite) is currently under contract, again for a profit.  I have not been deducting the mortgage on it because it was vacant land.

I asked every year since 2015 did he buy the land to hold for appreciation. He said no he bought it to live on.   He told me he had an offer but he refused to sell at a loss. My thought is this makes it investment property (property held to make a profit).  But then he through in it was a home equity not a regular mortgage on it. All my research says it would still be deductible as investment interest.

I usually do simple returns and want to make sure I am correct. My question: Would the interest on the HELOC be deducted as investment interest?