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sep84 · Jul 19, 2010, 02:05 PM

Hi,

My husband is in H1B visa. We have purchased a property( Independent Home) in India by taking loan from a bank in India during Jan 2010. My husband pays the EMI from his earnings in US. Can we claim the amount paid as EMI as a part of tax deduction when filing tax return for 2010. Please explain

AtlantaTaxExpert · Jul 19, 2010, 02:44 PM

We have addressed this issue a number of times, and the answer is... it depends!

I need to know HOW MUCH the annual mortgage interest on the home in India will be by 31 December 2010. Given that the joint standard deduction for 2010 will exceed $11,500, it is entirely possible that, even with the interest deduction and other itemized deductions, your total itemized deductions will NOT exceed that joint standard deduction.

If it does, then you have the quandary of the IRS position that you MAY have to withhold 10% of the monthly payment to cover any taxes owed by the Indian bank. Of course, neither the Indian Bank nor the Indian government will recognise the IRS' right to tax that interest and thus will NOT tolerate you withholding ANY money, so the IRS will expect YOU to make the payment out of YOUR pocket.

State how much your total 2010 worldwide income will be, in which state in the U.S. you are located, and HOW MUCH the interest will be, and I can better address your concerns.