In Indiana I can deduct the property taxes paid, but in my case I bought a new house and still own the old house. I've been working on it for a year now preparing it for sale, but seeing as it sits empty and is not a revenue generating property, can I deduct its taxes as well as my principle dwelling. Please help me as I can't find a description that covers my specific situation.

Yes - you can deduct property taxes from both a first and second home. See:
Frequently Asked Questions - 3.6 6. Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses) (http://www.irs.gov/faqs/faq3-6.html)

Mortgage interest on the seconfd home is also deductible - see Pub 936: http://www.irs.gov/pub/irs-pdf/p936.pdf