Can vacant land held for future rental development generate a deductible loss in the meantime?

Generally, no. Vacant land held for future rental development, but not yet earning any rental income, generally can't generate a deductible loss for carrying costs like property tax and loan interest in the meantime. Because the land isn't producing income yet, these carrying costs are often required to be capitalized, added to the land's cost, rather than deducted currently against other income, since there's no rental activity yet for them to offset.

This surprises people who assume that because they clearly intend to build a rental property eventually, the carrying costs along the way should be treated the same as expenses on an active rental. But undeveloped, non-income-producing land is subject to its own restrictions precisely because it isn't yet part of an income-earning operation. The practical effect is that these costs aren't lost - they typically get added to the land's cost base, which can reduce a future capital gain or increase future CCA claims once the property is developed and generating income, but they can't be used to offset your other current income while the land sits vacant and undeveloped. Planning around the timeline for actually starting to develop the land is worth doing given this restriction.