Interest payments

[TAX]

Client, individual, has no house in USA. He told me that he pays mortgage interest to a property he owns in other country.

Can he take mortgage deduction on Schedule "A"?

I do not think so but I want to make sure as previous accountant did (in 2007) deduct mortgage interest on SCH A.

Thanks!

[AZ-Tax]

Does the TP have a form 1098?

Does the TP have a form 1098?

[travis bickle]

Form 1098 does not prevail

In order to claim the mortgage interest, the T/P must
1/ itemize
2/ be legally liable for the loan
3/ have a true debtor - creditor relationship with the lender
4/ mortgage must be on a qualified home [either the T/P's first home or second home. IF the home is a rental property, then obviously the mortgage interest does not go on Sch A, but on Sch E].

Whether or not a Form 1098 exists means nothing unless the above 4 items are satisfied -- think about cases where an individual has 3 [or more] homes all mortgaged -- he might very well have a 1098 for all his homes, but he can only claim for two of them.

And, a Form 1098 might not exist in situations where the seller is carrying the note.

So, finally, IRS Pub 936 has no restriction stating that a qualified home must be in the USA; so, based on that, mortgage interest paid on a foreign home can be deducted on Sch A, if the above 4 points are met.

[TAX]

QA (Question Answered)

So, finally, IRS Pub 936 has no restriction stating that a qualified home must be in the USA; so, based on that, mortgage interest paid on a foreign home can be deducted on Sch A, if the above 4 points are met.

Thank you!