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Can I include my home in India as my vacation home on US tax returns?

August 21, 2008


From:  Rahul
Date:  21 Apr 2008

Can I include my home in India as my vacation home in my U.S. income tax returns. I am a resident alien with a valid H1 B (specialty workers) visa. If yes, what proof or documents are required by the IRS?

Thanks!

Answer

Date:  25 Apr 2008

Hello Rahul,

Under the rules for deducting interest at Internal Revenue Code Section 163(h)(4), a qualified residence includes a vacation home, as defined in Internal Revenue Code Section 280A(d)(1). There is no requirement that the residence be located in the United States. The home must have been used for personal purposes for a number of days which exceeds the greater of (a) 14 days, or (b) 10% of the number of days for which the unit is rented at a fair rental.

Personal use includes use for personal purposes by the taxpayer or any other person who has an interest in the unit, or by any member of the family (including brothers, sisters, spouse, ancestors and lineal descendents) of the taxpayer or such other person. An exchange arrangement for the use of another dwelling unit for personal use (time share) qualifies as personal use. Use by another person (family friend) when no rent is charged also qualifies as personal use.

Foreign real property taxes are tax deductible as an itemized deduction on your federal income tax return.

For documentation, you should have invoices or statements for the interest and taxes that you paid. You should also keep records of the use of the house. If you are staying at the vacation home, keep your flight records. These items are not submitted with your income tax returns, but should be kept with your tax records in the event of an income tax audit.

Good luck!
Mike Gray

We have more answers to frequently asked real estate tax questions! We also offer up-to-date information about new tax real estate tax developments in Michael Gray, CPA's Real Estate Tax Letter.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

Can I include my home in India as my vacation home on US tax returns?

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