I'm a US Permanent Resident and am planning to buy a house in India with loan taken from an Indian Bank. I want to know if I can claim deduction in US for this mortgage payment.

Thanks
Mahesh

Actually, you CAN claim such mortgage interest, but you will be required to identify from whom you got the loan.

You may also be required to withhold 30% of the monthly payment and send it to the U.S. government to make sure the Indian Bank pays its taxes on the money received from a U.S. source, i.e. YOU!

I agree with ATE. As long as the loan would have qualified for a deduction if the property were in the U.S. then you can deduct the interest expense if the property is located outside the U.S. Also, under the U.S.-India Income Tax Treaty, the withholding tax rate on the interest paid would be reduced from 30% to 15%.

I concur with IntlTax on the 15% rate.