I have my only income in The USA. I have H1B VISA.

In the last days of 2006 I bought a house in Italy and my parents are leaving there. There is a mortgage on the property for an amount less than 80% of the value of the property.

I know that I can deduct the interests in the form 1040. But I do not know how. I have all the documents from the Italian bank in which I can read the amount of the load (in euros), the exact amount of money paid in 2007 and the exact amount of interests and principal.

Question # 1. How do I deduct the intersts?

Question # 2. Which forms do I have to attach? Please help me with all the possible details.

#1 and #2: The interest is deducted on Schedule A, as is any real estate taxes paid on that property.

This is a basic tax issue. If you could not figure this out by simply reading the tax form instructions, you REALLY need to get professional tax help!

Thank you.
Several years ago I had problems with my resident alien issues and I had to study everything and I was hoping that this time I couldget the info directly from you. The I will study the rules for real estate. Any other information you can provide is appreciated.

I studied schedule A of form 1040. The home mortgage interests should be reported in line 10. However, my mortgage is paid to a foreign bank for a home in a foreign Country. So I do not have form 1098!
What should I do? I have the total amount of the interests paid in 2007 and I can convert it in dollars. Should I put that amount in line 10 of Schedule A of FORM 1040? Please help me with this.
Thanks

Mortgage interest on a second home is deductible on schedule A as an itemized deduction, even if the second home is located outside the U.S. The interest should be reported on Schedule A on the line that say mortgage interest not reported on Form 1098. However, if you reside in the U.S. and the lender is a foreign person/bank, then you are required to withhold 30% tax on the interest portion of the payments, unless a lower treaty rate applies. A quick review of the U.S.-Italy Income Tax Treaty (article 11) provides that the rate is reduced to 15%. However, if you want to rely on the treaty, you need to obtain a Form W-8BEN from the foreign lender where the lender certifies that it qualifies for treaty benefits. In either case, you will need to also file Form 1042 and 1042-S reporting that you made interest payments to foreign persons.

Agreed.

Glad you agree.

See other posting; am posting AGREED to mark that I have read the posting.