anukoti[at]yahoo.com wrote:

- quote -

The conclusion that the interest is deductible as mortgage
interest on Line 11, Sch A doesn't necessarily follow from
the fact the lender issues a statement itemizing payments on
principal and interest. You and the property and the
mortgage will have to meet the requirements given in Pub 936
on what constitutes an elgible second house and the loan
must be secured by either your first or second residence in
order for it to qualify as deductible mortgage interest. It
may be, but there isn't sufficient data here to tell and the
issuance of the statement from the lender isn't, by itself,
sufficient.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

<anukoti[at]yahoo.com> wrote:
- quote -

Is there a "lesser tax treaty rate"? (See Table 1 in IRS
Publication 515 or 901)
http://www.irs.gov/publications/p515/15019905.html

In what country is the recipient of your interest payments?

But, it sounds like the answer to your questions is "yes".

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

anukoti[at]yahoo.com wrote:

- quote -

The details on with holding are spelled out in IRS publication
below. However I can't figure how they are applicable to
Mortgage deduction.

Federal Income Tax Withholding and Reporting on Other Kinds of
U.S.-Source Income Paid to Nonresident Aliens

http://www.irs.gov/businesses/small/...129241,00.html

It says any interest paid to Foreign entities If the interest
is from U.S. source and paid to a nonresident alien, it is
reportable for any amount in excess of zero. Withhold at 30%
or lesser tax treaty rate.

In my case since I'll be paying the interest to a foreign
bank the question is DO I need to withhold 30% taxes and file
1042-S?

Thanks.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

I'm a US Citizen living in the US and recently purchased a
house in a foreign country for investment purposes.

The mortgage loan was obtained from a local bank in local
currency.

The bank issues a year end statement showing the interest
component separately. So I know that I can deduct this
interest on Schedule A line 11. BTW, I'm eligible for
Itemized deductions.

But the Question is "Am I legally required to withhold the 30%
taxes since the loan is being paid out of funds from the US?"
I have talked to many people including IRS itself and some
CPAs but can't seem to find an answer to this puzzle.

Please Please help me. Or if you can refer me to someone who
specializes in foreign tax withholding that would be of great
help.

==========
Moderator:
What 30% taxes? Withholding on whom? Certainly not on
payments to a legitimate foreign bank! I'd be more
concerned about management fees, depreciation, and gross
revenues and expenses on a house an auditor can't see.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >