Can I Claim Deductions for Expenses Related to a Foreign Property on My US Tax Return?

[hrawat0022]

Hi,

I am an employee and I purchased an apartment in India in December 2024. To acquire the property, I incurred various expenses such as commissions, homeowner association dues, insurance premiums, local property taxes, management fees, travel expenses (for traveling to and from India), and utilities. Additionally, I took a partial loan to finance the property.

• Could I claim any deductions for these costs on my US tax return? Will it be under Schedule E (Form 1040)?
• I have rented out the apartment starting in January 2025, and the rent is being deposited into my Indian bank account. Next year, I understand that I will need to report this rental income as earned income in the US. However, could I claim any deductions on this income, considering I am also paying a mortgage?

Thank You!

[MarilynG1 · Accepted solution]

If you purchased an apartment in India to then rent it out, add any costs you incurred for the purchase to your Cost Basis (price you paid) when setting up your rental property on your 2025 return.

This will then calculate depreciation for you using that total amount.  You'll be able to claim mortgage interest and property tax you pay as Expenses for your rental property on Schedule E.

For your 2024 return, you can claim any Mortgage Interest/Property Tax you paid in December 2024 as an itemized deduction on Schedule A.  

Here's more info on Foreign Rental Income and Depreciating Foreign Property.

@hrawat0022