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    Brunomoller's Avatar
    Brunomoller Posts: 1, Reputation: 1
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    #1

    Jan 10, 2012, 06:17 AM
    Sales tax on purchase of foreign property
    I am a US citizen residing in the United States. Last year, I bought a house in Spain. I have mortgage loan in Spain. Clearly, I can deduct the mortgage interest payments; however, in Spain there is an 8% "sales tax" on the purchase price of the house. Can I deduct this "sales tax" on Schedule A Line 6?
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    Jan 10, 2012, 06:57 AM
    No - per the IRS there are 5 types of deductible non-business taxes:

    -State, local and foreign income taxes
    -State, local and foreign real estate taxes
    -State, and local personal property taxes
    -State and local sales taxes, and
    -Qualified motor vehicle taxes

    Spain is not "state or local," so the sales tax is not deductible. However be sure to keep track of this tax payment as it increases your tax cost basis for the home, and when it comes time to sell any capital gains is reduced by that amount.
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