Unless you have begun construction of a home on the bare land that you can occupy within 24 months, the land would be considered an investment and the interest you paid on the second mortgage would not qualify as deductible mortgage interest. However, it would constitute investment interest if you itemize your deductions. For more information, refer to Publication 550, Investment Income and Expenses, Chapter 3 and Publication 936, Home Mortgage Interest Deduction.

References:

• Publication 936, Home Mortgage Interest Deduction
• Publication 550, Investment Income and Expenses
• Tax Topic 505, Interest expense

Source: www.irs.gov