Hi,
I am a US citizen and permanent resident of Australia, residing full time in Australia.
I own my home in Australia and have a mortgage with an Australian bank (building society) to whom I pay mortgage interest.
Trying to complete my US tax forms as I;ve just learned I am required to do despite my permanent residence in Australia.
From reading IRS publications, this forum and elseshere, it looks like I should be able to deduct the mortgage interest as an itemised deduction on 1040 Schedule A.
Because I pay it to a non-US bank, there is no form 1098 for the interest paid and it looks like I report this on Schedule A line 11 (instead of line 10).
Because I reside fulltime overseas and the funds used to pay this mortgage are sourced entirely from overseas, it does not look like the 30% withholding issue some US residents with US income sources have had reporting foreign mortgage interest paid would be an issue for me.
Can a tax expert please confirm my interpretation ?
Thanks,
Websider, Australia

Confirmed; the IRS makes NO attempt to collect on mortgage payments made to foreign banks if the owner of the property resides overseas.