U.S. citizens are taxed on their worldwide income. They must figure gain or loss on the sale of foreign real property. If the foreign property is a residence, the home sale exclusion may apply. Note: If foreign taxes are paid on the sale, this may trigger a deduction or credit for those taxes.
Debt secured by a principal residence or second home to the extent of the excess of fair market value over acquisition debt. An interest deduction is generally allowed for home equity debt up to $100,000 ($50,000 if married filing separately).