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    Retiredexpat's Avatar
    Retiredexpat Posts: 4, Reputation: 1
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    #1

    Feb 15, 2013, 08:17 PM
    Can I deduct mortgage interest paid to a foreign bank?
    I live in Germany and bought a house there with a local bank doing the financing.
    Can I deduct the interest paid (by converting the Euros to Dollars) to the German bank on my US income tax return? I have no otherproperties and earn my income completely overseas. Thanks for any help, this is my first year in this situation and I could use the deduction! :-)
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Feb 15, 2013, 11:14 PM
    Yes, you CAN and SHOULD deduct the mortgage interest on your U.S. tax return.

    Because you live overseas, you need not fear the IRS requesting that you withhold 30% of the payment to cover U.S. taxes on the bank, because it does not apply if the U.S. citizen is living overseas.
    Retiredexpat's Avatar
    Retiredexpat Posts: 4, Reputation: 1
    New Member
    		  
    #3

    Feb 17, 2013, 10:08 PM
    Dear AtlantaTaxExpert,

    THANK YOU for clearing this up; I looked into the IRS website and didn't see anything excluding this deduction.

    :-)

    A VERY Grateful -

    Retiredexpat
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #4

    Feb 17, 2013, 10:41 PM
    Glad to help!
    Retiredexpat's Avatar
    Retiredexpat Posts: 4, Reputation: 1
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    #5

    Feb 17, 2013, 10:56 PM
    I'm using Turbotax. Do you think it'll be a problem to enter this into the data, since I won't get a US form? Also, I calculated the annual 2012 average Euro to USD rate, so once I get the form from the German bank, I should just convert it and enter this as mortgage interest. Thanks again for the help!
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #6

    Feb 17, 2013, 11:05 PM
    I do not think it will be a problem with TurboTax, though you will have to enter it direct on the Schedule A.

    If it is a problem, switch to TaxAct.com.
    Retiredexpat's Avatar
    Retiredexpat Posts: 4, Reputation: 1
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    #7

    Feb 17, 2013, 11:11 PM
    Wilco.

    Thanks again AtlantaTaxExpert... you ROCK!

    :-)

    V/R - Retiredexpat
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