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Foreign Tax Credit Form 1116: Mortgage Interest

3504 Views 2 Replies 2 Participants Last post by  wombat53
Hi - Am wondering abut Question 4a), "Deductible Home Mortgage Interest". My question is - is home mortgage interest paid on a FOREIGN home also deductible, or is this question related only to a US home, where we all know that Mortgage interest is deductible?
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Home mortgage interest is deductible on your US tax return under the same conditions as it is in the US:

  • the interest must be paid on a mortgage for your primary or secondary residence, whether located in the US or elsewhere
  • you have to be itemizing deductions to deduct
  • subject to the limitations on deductible home mortgage interest

As it says, use the worksheet on p. 14 of the instructions for form 1116. If you take the FEIE (i.e. form 2555 exclusion for earned income), you have to allocate your home mortgage interest between the income you are excluding from taxation and the income on which you're taking the foreign tax credit.
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