Had a client with a question: Person owns/buying a 2nd home in a foreign country (Russia). Can he deduct the mortgage interest? He has no foreign income,all income is earned in US, taxes paid etc, the 2nd home is for R&R
Glenda
Glenda
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Mortgage interest paid on a 2nd home located in a foreign country is deductible, provided all other home interest deduction rules are met.
Mortgage interest is deductible under Section 163(h). That code section makes no mention of or denies a deduction for interest paid on a residence located in a foreign country. Code Section 163(e) dealing with original issue discount (OID) makes several references to obligation held by related foreign persons. But there is no similar reference in Section 163(h). Thus, if Congress intended to limit mortgage interest deductions to properties located only in the U.S., the code would have been written to exclude foreign residence interest.
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