Exactly...

(i) In the case of unimproved and unproductive real property: Annual taxes, interest on a mortgage, and other carrying charges.

(ii) In the case of real property, whether improved or unimproved and whether productive or unproductive:

(a) Interest on a loan (but not theoretical interest of a taxpayer using his own funds),

(b) Taxes of the owner of such real property measured by compensation paid to his employees,

(c) Taxes of such owner imposed on the purchase of materials, or on the storage, use, or other consumption of materials, and

(d) Other necessary expenditures,

Annual tax is included for unimproved and unproductive real property, but NOT for real property, whether improved or unimproved and whether productive or unproductive

Unless you include annual tax as "d.  Other necessary expenditures"

I always took the regs to mean property tax (annual tax)  is allowed to be capitalized on unimproved real property and NOT improved.....