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    VJ2012's Avatar
    VJ2012 Posts: 3, Reputation: 1
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    #1

    Dec 5, 2012, 02:52 PM
    Tax Deductions on Home Loan outside US
    Can I get tax deduction for home loan outside US? Filling a resident alien.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #2

    Dec 5, 2012, 06:26 PM
    Yes, such loan interest IS deductible.

    However, the IRS MAY insist that you withhold 30% of the payment to ensure that the foreign bank pays U.S. income taxes on the payment. Since your foreign bank will NOT allow you to withhold 30% of the payment, that money would have to come out of YOUR pocket, which probably offsets any tax benefit you get. While this is NOT likely, it CAN and HAS been done legally in the past.

    Also, remember that home mortgage interest is an ITEMIZED deduction, so the interest, when combined with other itemized deductions, must exceed the standard deduction.
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