Home buyer - abroad

If the home meets the requirements for either your principal residence or a second home, the appropriate rules for deducting the mortgage interest apply. If, when you sell the home, you have used the home as your principal residence and meet the 2 out of 5 rules, you may claim the $250,000 ($500,000 on a joint return) exclusion for any gain. There is nothing in the rules for either mortgage interest deduction or the gain exclusion that requires the property to be in the US. Lanny K. Williams, CPA Nawarat, Williams & Co., Ltd. Income Tax Services for Expatriate Americans