Hi,

I am working in US for last few months. I want to buy an apartment in my home country India.

Can someone please share knowledge on how much tax benefits can I avail in US if I take home loan from an Indian bank for an apartment in India ?

Thanks.

None what so ever, if you buy property in the US, but not outside the US

According to IRS and legally it is very correct that you can take a tax deduction of Foreign Home Mortgage Interest paid on a foreign Home. But at the same time it very impractical to take this deduction for the following reasons:

1. You need to get Form 1098 form the recipient of the interest to report this HMI.
2. Even if you do not get this Form 1098 from the lender, you need to report the SSN or EIN of the recipient to report on SCH A. Else you will be disallowed the deduction and in addition you will be levied a penalty of $50.
3. Generally the foreign bank will never give you the Form 1098 or its EIN, because they are at obligation to pay 30% (applicable tax treaty rate) to the IRS.
4. The tax payer has also has an obligation to withhold taxes from the interest payment, for which no foreign bank will permit.
5. Resident Aliens of US has to pay their tax to US on their world wide income(not only income from US but income from outside US). Resident Aliens should also think of applicable capital gains tax in case they sell the house property.

Kishore
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