Hi all
I am in USA on a work Visa (H1B). I don't own a house in america. But I do have a house in my home country for which I am paying mortgage interest. Lender is bank from my home county. Is this interest tax deductable. I can provide statement from my foreign lender stating that I paid so much in interest (statement shows foreign currency). Please help me with your valuable advices
Thanks

Interesting question - in this case your house in your home country would be considered your second home. I looked over Pub 936 but can't find anything that says specifically that the home must be in the US in order to deduct interest. However, either the mortgage lender must supply you a form 1098 or you must indicate the mortgage lender's name and federal tax ID number on your return - see the instructions in Pub 936 for details. In your case I doubt your lender has a Tax ID number.

http://www.irs.gov/pub/irs-pdf/p936.pdf

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Originally Posted by ebaines

Interesting question - in this case your house in your home country would be considered your second home. I looked over Pub 936 but can't find anything that says specifically that the home must be in the US in order to deduct interest. However, either the mortgage lender must supply you a form 1098 or you must indicate the mortgage lender's name and federal tax ID number on your return - see the instructions in Pub 936 for details. In your case I doubt your lender has a Tax ID number.

http://www.irs.gov/pub/irs-pdf/p936.pdf

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Thank you for your prompt answer ebaines. Is there any other way I can claim this deduction, if my lender cannot provide me with a form 1098? Also since I don't have a primary home in USA, still I can claim my home in my native country as a second home? Please advise. It doesn't make any sense for me to buy a home in america as I am here on a temporary work visa and will be going back in couple of years... Thank you once again for your help..

Is there any other way I can claim the mortgage deduction, if my lender cannot provide me with a form 1098? Also since I don't have a primary home in USA, still I can claim my home in my native country as a second home?

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 says mortgage interest not reported on Form 1098. However, if you reside in the U.S. and the lender is a foreign bank, then you are required to withhold 30% tax on the interest portion of the payments, unless a lower treaty rate applies. If you want to rely on the treaty, you need to obtain a Form W-8BEN from the foreign bank where the bank 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.