Spec Home Tax Treatment

[Josh Madigan]

I own a second home on a large piece of property.  I plan on subdividing a portion of it and building a single family home on this new parcel.  I believe this home will increase in value over time, so am considering it a "spec" home.  I also plan on letting guests and family stay in the newly constructed spec home before it is sold.  Which leads me to my questions:

- My lender tells me I will need an investment mortgage on this property, does that mean I will be able to deduct interest exp/taxes/operating losses  etc against other passive real estate income from other rental properties i own?

- Any other tax implications I should be considering?

Thanks for your help