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

    Feb 17, 2008, 01:13 PM
    Tax deduction for interest on foreign loan
    Hi

    I am a Swedish citizen living in Sweden and I am in the process of buying an apartment in NYC. I will be subletting the apartment for most of the year and my questions are:

    1) How much is the tax on the income from the subletting?

    2) If I finance the purchase with a loan from my bank in Sweden, will I be able to deduct the interest from the rent income? What I mean is, is this still true:
    (rent income - interest) * tax rate = tax

    Thank you!
    IntlTax's Avatar
    IntlTax Posts: 831, Reputation: 23
    Tax Expert
    		  
    #2

    Feb 23, 2008, 02:36 PM
    The federal tax rate is a graduated rate with the highest rate of 35%. You will also owe NY state and NYC income taxes. I don't know off-hand how much these are, but the combine rate for both is likely less than 10%. If you borrow in Sweden, you will not be able to deduct the interest to reduce your U.S. tax.
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