Higgins
Hello!

You can generally deduct mortgage interest from your taxable income, but there are specific conditions regarding properties located abroad. You can typically deduct the interest paid on mortgages for properties that generate rental income. If the property abroad is rented out, the mortgage interest can be deducted against the rental income on your tax return. However, if the property is not generating any income, such as being a vacation home, the deductibility of the mortgage interest may be more complex, as the tax authorities may not allow deductions for expenses related to non-income-generating properties.

Higgins
Yes, proving that your property is income-generating can make a big difference. If the property abroad is rented out, providing evidence of rental payments, like lease agreements or bank statements showing regular rent deposits, should typically be sufficient to justify the deduction of mortgage interest.

The reason the tax authorities focus on whether the property generates income is related to the principle that deductions are often allowed when they offset taxable income. If a property is not bringing in any revenue (like a vacation home), the mortgage interest can’t directly be seen as a cost of generating taxable income. That’s why deductions for non-income-generating properties can be more restricted, as they are considered personal expenses rather than business or income-related expenses.

So, if your property is rented out, make sure to keep detailed records, as this will help when declaring the mortgage interest on your tax return.