The tax implications of non-recourse loans depend on the type of loan and the borrower's individual situation. Generally, the interest paid on a non-recourse loan is tax-deductible, just like with a recourse loan. However, the borrower may not be able to deduct the full amount of the interest if the loan is considered a "qualified mortgage" under the Tax Reform Act of 1986. In this case, the borrower may only be able to deduct the interest on the loan up to the fair market value of the property. Additionally, the borrower may be subject to capital gains taxes if the loan is used to purchase an investment property.
For more information on the tax implications of non-recourse loans, please consult a qualified tax professional.