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    rl_taxquery's Avatar
    rl_taxquery Posts: 2, Reputation: 1
    New Member

    Mar 20, 2008, 03:13 PM
    Mortgage Interest Deduction on Payment to Foreign Lender
    Hello Experts,

    I have a query, I have gone through previous posts but somehow felt I have not got all the answers I wanted.

    Need your help here:

    1) I have a mortgage in India from an Indian Bank who doesn't have a branch in the US

    2) I work in the US and remit the monthly payments electronically in USD buy the lender receives the payment in local currency.

    4) Is it possible to claim interest payment deduction on my itemized filing.

    5) If possible what other forms do I need to file apart from the 1040.

    6) What other supporting documents do I need to maintain when claiming this deduction ( I have bank statements where the payments go to the lending bank, I have payment breakup of how much principal and how much interest was paid, but in local currency.)

    IntlTax's Avatar
    IntlTax Posts: 831, Reputation: 23
    Tax Expert

    Mar 20, 2008, 06:13 PM
    See the post at
    rl_taxquery's Avatar
    rl_taxquery Posts: 2, Reputation: 1
    New Member

    Apr 13, 2008, 05:24 PM
    Hi IntlTax,

    As per the link given, I can claim the interest paid, but I have to withhold tax on it 30% to x% (based on treaty).

    But I have been researching and what I have known is the withholding is to be done only if the foreign entity is a foreign tax payer to the FED from IRS perspective.

    If the foreign entity is not a foreign tax payer to the FED then I need not withhold anything from the interest paid.

    Please advise if this is right.

    IntlTax's Avatar
    IntlTax Posts: 831, Reputation: 23
    Tax Expert

    Apr 14, 2008, 05:02 AM
    No. Unfortunately, your research is wrong. There is no requirement that the foreign tax payer have any connection to the U.S. other than having made a loan to a U.S. person.

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