Can I deduct mortgage interest paid on my foreign home?

By Jason Watson (Google+)

Yes, if it meets all the usual tests of a domestic home. The loan must be an acquisition loan (one to purchase the home), and it must be secured by the home. The two home (main home and second home) limit applies in addition to the $1 million total debt limit. Interest on equity loans may also be deducted up to $100,000 of loan amount.

Of course, you must be able to itemize your deductions on Schedule A to take advantage of the mortgage interest deduction. Commonly the mortgage interest and property taxes alone are enough to propel you into exceeding the standard deduction and allowing an itemization of your deductions.

Lastly, the amounts must be in USD denomination- this can prove tricky especially given fluctuating currency exchange rates, however, we can easily convert amounts as necessary.