IRS allows interest deductions on supposedly interest-free sharia compliant loans

This is outrageous. Not only have Muslims convinced American banks to play their convoluted "Sharia Finance" games, the IRS will allow Sharia Compliant loan holders claim a deduction for interest that is supposedly non-existent in under terms of the loan.

So the West gets screwed twice. Once by having Sharia Compliant Finance forced into the system, and by the IRS giving deductions for "non existent" interest. What a deal, wish I could get a loan that the government would pay the interest on.

FROM CREEPINGSHARIA:

IRS allows interest deductions on supposedly interest-free sharia compliant loans
By creeping

Hat tip to the Shariah Finance Watch blog which writes that the AP is recycling an article on sharia mortgages in Minnesota that’s making its way around U.S. newspapers and websites. We covered it a few weeks ago here.

More interesting, is information included within SFW’s additional research, below, that claims the banks advise customers and the IRS allows interest deduction on interest free loans:

This additional article gives us an opportunity to provide an explanation of how Shariah-Compliant loans work and how they get around the whole issue of interest. This explanation was originally published on 15 April 2008 in a Frontpagemag.com interview of Alex Alexiev by Jamie Glazov:

The most common SCF transaction is called murabaha which is the equivalent of a conventional bank loan to finance a purchase. What makes murabaha ostensibly Islamic is that the bank supposedly purchases the good and takes a degree of risk on while holding it prior to selling it to the customer on repayment terms, including a mark-up (interest) for the service. In practice, both operations happen simultaneously, the client is also asked to purchase insurance and there is zero risk for the bank. In fact, the bank also charges in advance penalties for late payment that are refunded if the loan is paid on time. In everything but name, this is a standard interest loan except that it is invariably more expensive. A similar thing happens with home mortgages where the bank purchases the home and finances it by requiring ‘rental’ payments in a transparent scheme called ‘diminishing musharaka.’

After engaging in semantic acrobatics to deny that what’s involved is interest-based mortgage lending, the bank then turns around and tells its clients to take the interest deduction on their tax return, and the IRS authorities, bless their compassionate hearts, fully oblige them.

Talk about a loop hole. Either the IRS allows a deduction on the banks profit, or the banks are actually charging interest collected up front and Muslims aren’t really getting interest free, sharia compliant loans. Can you have it both ways?

We, Creeping Sharia, confirmed with Devon Bank that the IRS does indeed allow an interest deduction on tax returns of sharia compliant murabaha loans that supposedly do not charge interest. To do so, the bank issuing the sharia loan must provide a statement to the home owner detailing interest paid. The homeowner then reports it to the IRS (possibly on IRS Form 1098).