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Home > Money & Services > Taxes   »   Private mortgage loan interest for rental property deductable?

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Old Aug 28, 2008, 08:58 AM
seawatcher
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Private mortgage loan interest for rental property deductable?
If I get mortgage loan from a private person overseas to finance purchase of a rental property, is my interest payment of this loan tax deductable?

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Old Aug 28, 2008, 09:49 AM   #2  
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Yes, provided you report to the IRS exactly to WHOM you are making these payments.
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Old Aug 28, 2008, 10:08 PM   #3  
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You may also need to withhold 30% tax on the interest portion of the payment (see Sec. 871 (a) and Form 1042), unless a treaty applies or the loan qualifies for the portfolio interest exception. Sec. 871(h).

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Old Aug 29, 2008, 04:40 AM   #4  
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Quote:
Originally Posted by IntlTax
You may also need to withhold 30% tax on the interest portion of the payment (see Sec. 871 (a) and Form 1042), unless a treaty applies or the loan qualifies for the portfolio interest exception. Sec. 871(h).
Is the withholding requirement still applies if the property is for personal use and not for rental?
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Old Aug 29, 2008, 08:02 AM   #5  
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Yes, the withholding applies even for a loan related to personal use property. Technically, the loan stands alone (separate from property which may secure the loan).
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