Mortgage interest = deduction?

The interest is deductible.

Expenses for construction are not deductible when they happen.  A portion, called the depreciation, is deductible each year that you continue to own it.  If you keep the building for long enough, then the entire construction would be deductible eventually, over the life of the building.

However, when you sell the building, your "basis" is adjusted by the depreciation, so you'll end up paying capital gains tax unless the value has really dropped a lot.

My brother is a Certified Public Accountant. Those guys know all of the answers to the questions you are asking.

It would be more than wise for you to speak to an accountant about all the questions you have.

Please do not depend on Yahoo answers for this important  information you seek.

Answer based on USA tax law - disregard if you're in another country:

Interest on mortgages for your personal residence and secondary home is deductible as a personal deduction. Since the new tax laws went into effect in 2018 which raised the standard deduction, only about 10% of Americans will benefit from itemizing deductions on their personal returns. As a result most people will get no tax savings from buying a house and paying a mortgage.

If you are building a rental property as a business/investment then the cost of construction may be deductible against the business revenue. Interest on the construction loan might be allocated to the total capital cost which has to be depreciated over numerous tax years. The specific methodology and actual tax savings will vary based on a variety of factors. In other words - hire a qualified CPA or tax attorney to go through your numbers and file your returns in the most beneficial legal way.

Your best bet is to consult your CPA regarding the interest on a construction loan.

Used to be like that and it still is in some countries........ so country matters.

Tax laws vary from country to country. I don't know if they're the same in your country as in mine. Interest would be deductible. Your own cash is not.

The rental property is considered a business property.   You have to declare all income on your taxes.   From that you subtract mortgage interest,   insurance,  taxes,   property manager fees,   any upkeep that you do such as mowing and maintenance.   You also get to depreciate the property about 1/29th of the base price each year.   If you do not know all this then use Turbo Tax or get a tax guy to help you.