[Amazeing]

Can I deduct mortgage interest on a home outside the U.S.

[AtlantaTaxExpert]

Yes, it is done all of the time.

[ebaines]

I would add that because the foreign bank that holds the mortgage has probably not provided a form 1098 to you or the IRS like a US mortgage holder would do, there is no record of the amount of interest you paid that is readily available to the IRS. Consequently it's likely that the IRS may challenge the deduction amount on your tax return. So be sure to keep good records and proof of payments of the interest amount, as well as the foreign exchange rates that you used to calculate the amounts paid in $US.

[AtlantaTaxExpert]

Well, if we are going to go in details, let's talk about the possibility that the IRS may insist that you withhold 30% of the payment and send it to the IRS as payment of the taxes they may assess on the foreign bank.

You see, the IRS considers the interest YOU pay as U.S.-sourced income that is subject to U.S. income taxes. Of course, the foreign bank does not recognize that, and has no intention of paying such taxes, so the IRS gets the money at the source (YOU).

I have never had a client that this has happened to, but the taxes were collected, and the process has been challenged in tax court and decided in the IRS' favor back in the 19060s, so it IS possible,

[The Junoo]

Double post

[The Junoo]

The Junoo;3436604]Are you an owner or just on the mortgage( I mean responsible for the mort)? You have to own and be on the mortgage, plus this home has to be you or your spouse's primary or second residence. If together you and your wspouseown and are on the mortgage, and file jointly, then you can deduct the mortgage interest plus real estate taxes on your Sch A. The property does not have to be located in the US for you to take the deduction.If this property is neither your primary or second residence, you can still deduct any real estate taxes. As long as you pay home related taxes to the foreign taxing authority, you can claim it on your US return. But at the same time it may be impractical to take this deduction for the following reasons ,QUOTE, "You need to get Form 1098 form the recipient of the interest to report this HMI; Even if you do not get this Form 1098 from the lender, you need to report the SSN to report on Sch A;Generally the foreign bank will never give you the Form 1098 or its EIN, because they are at obligation to pay 30% ,applicable tax treaty rate, to the IRS; The tax payer has also has an obligation to withhold taxes from the interest payment, for which no foreign bank will permit."You neeed to keep all records and proof of payments of the mort interest.