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-   -   Private mortgage loan interest for rental property deductable? (https://www.askmehelpdesk.com/showthread.php?t=254010)

  • Aug 28, 2008, 08:58 AM
    seawatcher
    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?
  • Aug 28, 2008, 09:49 AM
    AtlantaTaxExpert
    Yes, provided you report to the IRS exactly to WHOM you are making these payments.
  • Aug 28, 2008, 07:08 PM
    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).
  • Aug 29, 2008, 01:40 AM
    seawatcher
    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?
  • Aug 29, 2008, 05:02 AM
    IntlTax
    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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