Residential property as Property held for investment

[Max Voz]

Hello,

I reside in the Bay Area and currently, I do not own any domestic real estate properties. However, I have a home in a foreign country, for which I took out a loan to finance the purchase. If I categorize this property as a second home, the interest I've paid on the loan doesn't surpass the standard deduction. As of now, the property hasn't been rented out nor have I lived in it. If I were to rent it out, the cash flow would likely be negative.

Here's my query: Is there a possibility to classify the interest paid towards this foreign property as an "investment income expense", thus enabling me to subtract this interest expense from my capital gains? Considering my tax bracket is over 40%, this adjustment could potentially lead to significant savings.

I have found information online suggesting that interest expenses on properties held for investment can be deducted from capital gains, similarly to how margin interest is treated. Given that I neither rent out nor live in the property, can I designate it as solely held for investment purposes to benefit from this potential deduction?