- quote -

Internal Revenue Code section 265 disallows a deduction for
expenses allocable to tax-exempt income. I'm aware of one
case involving this issue that the U.S. Tax Court has
decided. That case is Induni v. Commissioner, 98 T.C. 618
(May 20, 1992). The taxpayer received a tax-free foreign
housing allowance and deducted his mortgage interest. The
Tax Court sustained the disallowance of the deduction.

Frederick Lorca

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Larry Israel wrote:

- quote -

Schedule A is the only place you can deduct mortgage
interest and property taxes. The interest and property taxes
are not housing expenses for purposes of the housing
exclusion. Therefore, you may utilize the housing exclusion,
if you can qualify, and take the deductions on schedule A.

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SLARRY[at]weizmann.weizmann.ac.il (Larry Israel) wrote:

- quote -

I am not sure what you would be excluding. If you own your
home outside the US, you don't have any excludable housing
costs. The costs of owning your own home are not on the
list of excludable housing costs. In fact, the rules
specifically state that such costs are not excludable!

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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Can one take the foreign housing exlusion of Form 2555 and
also take the deductions for real estate taxes and mortgage
interest for the foreign home on Schedule A of the 1040?

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