@NCperson wrote:
@TaxQ1 - no, the interest is not deductible because the proceeds are from a personal loan and not a loan secured by the property.
To be considered a "mortgage" for the mortgage interest deduction, the loan has to be secured by a lien on the property. It doesn't have to be a bank loan, it could be from a friend or from the former owner, but it has to be registered with the proper authorities where the home is located as a lien.
Also, it used to be that foreign property tax was an allowable schedule A deduction along with property taxes on your US home, but that deduction has been removed by the tax reform law in 2017.
If you use the home in business (as a rental part of the year, for example) you can deduct a portion of your property taxes and loan interest as a business expense, even if the loan is not a lien. However, the loan proceeds have to be traceable to the property. For example, if you used a credit card, and then used the same card for other personal items, you would lose the ability to trace a specific portion of the interest payments to the purchase of the home.
