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OPLAW11 asked this question 3 years, 4 months ago:

Deducting Foreign Home Interest and Taxes

I was reading IRS Pub 936, regarding deducting home interest on a second home.

It says if you are receiving a housing allowance that is not taxable, you still can deduct your real estate taxes and your home mortgage interest. You do not have to reduce your deductions by your nontaxable allowance.


You can deduct home mortgage interest if all the following conditions are met.


  • You file Form 1040 and itemize deductions on Schedule A (Form 1040).

  • The mortgage is a secured debt on a qualified home in which you have an ownership interest.



In addition to your primary residence, current regulations permit you to use the Mortgage Interest Tax Deduction on one additional property.
It can be located in virtually any country with which the United States maintains reciprocal tax treaties (Germany is one of several in Europe). In addition, you can claim any foreign property taxes that you pay on this property along with your tax-deductible interest.

Does anyone itemize and claim their German home mortgage and taxes on their Federal Itemized Deductions (Schedule A)?



3 years, 4 months ago

Yes I do.

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3 years, 4 months ago

I would, but I'm not over here as military. From everything I've read you're not supposed to deduct mortgage interest and taxes as long as you're receiving LQA as a civilian. There's formula where it would allow you to deduct a portion of your interest and taxes in certain cases, but that formula doesn't work in my favor. If we keep our home after going back to the States, then yes, I'll deduct interest and taxes on our home as a second property.

3 years, 4 months ago

Quote by miclau:
I would, but I'm not over here as military. From everything I've read you're not supposed to deduct mortgage interest and taxes as long as you're receiving LQA as a civilian. There's formula where it would allow you to deduct a portion of your interest and taxes in certain cases, but that formula doesn't work in my favor. If we keep our home after going back to the States, then yes, I'll deduct interest and taxes on our home as a second property.


When you go back you can run it as a rental and have bigger deductions to include property management, repairs etc. You'll also need to file a German tax return.

How would the IRS know you are getting LQA? It's not on your w2. Matter of fact, Google IRS LQA and the IRS says that LQA is not on your w2.

I think JAG weighed in and said you can deduct your house as long as you deduct your LQA. Let's say you get 10k for LQA and your expenses are 20K. You'd have to reduce your deduction by 50% first.

3 years, 4 months ago

Thanks for the info Bergman! I guess I've just been erring on the side of caution. I'll run the numbers for 2015 and see how beneficial it might be for us

3 years, 4 months ago

miclau -

I'd be willing to bet that Robert Mitchell could help you with this. Give him a call. You can find his info, here.

Tell Robert that Sam sent you and says hello.

3 years, 4 months ago

JOFTAA, we know Robert very well...he helped us buy our house! Will pass on your greetings next time we talk.

3 years, 4 months ago

Quote by miclau:
JOFTAA, we know Robert very well...he helped us buy our house! Will pass on your greetings next time we talk.


Please let Roberto know that he owes me a nice dinner. The last time I was in town he took me to this nice place that had a big heart on the roof.

3 years, 4 months ago

Quote by JOFTAA:
Please let Roberto know that he owes me a nice dinner. The last time I was in town he took me to this nice place that had a big heart on the roof.


Great way to a happy ending.

3 years, 2 months ago

late to the game as usual but the key to this entire topic is this quote from the IRS publication

Ministers' and military housing allowance.
If you are a minister or a member of the uni- formed services and receive a housing allow- ance that is not taxable, you can still deduct your home mortgage interest.

Ministers and Military are the only groups that can deduct interest from their taxes on overseas properties regardless of it being a first or second home. Civilians receiving LQA are not entitled this write off unless their overall costs exceed the allowance. If your costs go over, you are able to write off the percentage of interest by the same percentage in which you exceed your allowance by.

However LQA is not listed on your W2 so as mentioned above there is very little cross checking happening. If your a Civilian know your not allowed to do it but do it at your own risk.

Quote by JOFTAA:
Please let Roberto know that he owes me a nice dinner. The last time I was in town he took me to this nice place that had a big heart on the roof.


i thought that was private

3 years, 2 months ago

Quote by Robert Mitchell:
late to the game as usual but the key to this entire topic is this quote from the IRS publication

Ministers' and military housing allowance.
If you are a minister or a member of the uni- formed services and receive a housing allow- ance that is not taxable, you can still deduct your home mortgage interest.

Ministers and Military are the only groups that can deduct interest from their taxes on overseas properties regardless of it being a first or second home. Civilians receiving LQA are not entitled this write off unless their overall costs exceed the allowance. If your costs go over, you are able to write off the percentage of interest by the same percentage in which you exceed your allowance by.

However LQA is not listed on your W2 so as mentioned above there is very little cross checking happening. If your a Civilian know your not allowed to do it but do it at your own risk.



i thought that was private


My bad. Sorry. The Penicillin worked great, by the way.

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