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Old 03-23-2014, 08:49 PM
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Mortgage Interest Deduction on Foreign Property

Looking for some information to base decisions on as I move through the home purchasing process:

I am US citizen who is being stationed (I am Active Duty Miliatary) in Spain starting in June. My wife is a Spanish citizen and a permanent US resident. We want to buy a home in spain that we will maintain and ultimately use as primary residence once i retire.

Can we deduct the mortgage interest off of our jointly filed US tax return?

I will be on the title of the home with my wife, but the loan is more expensive if I go on the mortgage, because i am a foreigner. I will be listed as a co-signer for my wife, but not a debtor. Do i have to be listed on both the title and as a debtor on the loan to be able to claim the interest? Again, we file joint income taxes in the US.

Is there anything I should consider when making the purchase or obtaining the loan that my be different because of my intent to retire and live in the home permanently in the future?

Thanks.



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Old 03-23-2014, 11:19 PM
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Originally Posted by jhar View Post



#1;Can we deduct the mortgage interest off of our jointly filed US tax return?



#2;I will be on the title of the home with my wife, but the loan is more expensive if I go on the mortgage, because i am a foreigner. I will be listed as a co-signer for my wife, but not a debtor. Do i have to be listed on both the title and as a debtor on the loan to be able to claim the interest? Again, we file joint income taxes in the US.

#3;Is there anything I should consider when making the purchase or obtaining the loan that my be different because of my intent to retire and live in the home permanently in the future?

Thanks.
#1;yes.aslongas you itemize deductions on sch a of 1040. If not, no.

#2;yes aslongas your name is on the title. Having your name on the deed to your house only satisfies one of the two initial requirements for claiming the mortgage interest deduction; the IRS also requires that you actually pay the interest. If your name is on the deed but someone else pays the interest, you cannot deduct the interest

#3;A home is often your most valuable capital asset. If you have a gain from the sale of your main home, you may qualify to exclude up to $250k of that gain from your income. You may quality to exclude up to $500k of that gain if you file a joint return with your spouse. In general, to qualify for the exclusion, you must meet both the ownership test and the use test. You are eligible for the exclusion if you have owned and used your home as your main home for a period aggregating at least two years out of the five years prior to its date of sale. You can meet the ownership and use tests during different 2-year periods. However, you must meet both tests during the 5-year period ending on the date of the sale. Generally, you are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home. as you, or your spouse, is on qualified official extended duty in the Uniformed Services, , you may elect to suspend the five-year test period for up to 10 years. You are on qualified official extended duty if, for more than 90 days or for an indefinite period, you are:
At a duty station that is at least 50 miles from your main home, or Residing under government orders in government housing.



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Old 03-24-2014, 02:08 AM
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#2;yes aslongas your name is on the title. Having your name on the deed to your house only satisfies one of the two initial requirements for claiming the mortgage interest deduction; the IRS also requires that you actually pay the interest. If your name is on the deed but someone else pays the interest, you cannot deduct the interest
Can I prove that I paid the interest by simply showing the payments from my account? This should not be hard, I am actually paying the home payment with my overseas housing allowance.



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Old 03-24-2014, 10:31 AM
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Can I prove that I paid the interest by simply showing the payments from my account? This should not be hard, I am actually paying the home payment with my overseas housing allowance.
yes i guess so you need copies of cancelled checks/ foreign bank stmt or other evidnces



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Old 09-06-2015, 03:17 AM
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if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.



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