Describe the tax treatment of the interest paid by cash-basis taxpayer.

Taylor takes out a loan of $100,000 on February 15, 2014, and uses the proceeds to buy a residential building lot, which serves as security for the debt.On January 5, 2015, Taylor begins construction of a house on the lot.He completes construction on December 28, 2015 (having spent $300,000, excluding the lot), and moves into the house as his principal residence on New Years Eve of that year.On March 1, 2017, Taylor obtains a mortgage loan for $350,000, secured by the residence.The lender pays off the initial $100,000 debt and disburses the remaining $250,000 to Taylor.