Comments on: borrowed family money to buy realestate here in the us. can i deduct the interest and do i need a contract? http://www.zo0om.com/realestate-properties/borrowed-family-money-to-buy-realestate-here-in-the-us-can-i-deduct-the-interest-and-do-i-need-a-contract Tue, 11 May 2010 20:00:59 -0400 http://wordpress.org/?v=2.8.4 hourly 1 By: mister ed http://www.zo0om.com/realestate-properties/borrowed-family-money-to-buy-realestate-here-in-the-us-can-i-deduct-the-interest-and-do-i-need-a-contract/comment-page-1#comment-2356 mister ed Sun, 28 Feb 2010 14:25:59 +0000 http://www.zo0om.com/realestate-properties/borrowed-family-money-to-buy-realestate-here-in-the-us-can-i-deduct-the-interest-and-do-i-need-a-contract#comment-2356 i think you best bet would be to post this question in the tax section!!!<br><b>References : </b><br> i think you best bet would be to post this question in the tax section!!!
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]]> By: MVD34 http://www.zo0om.com/realestate-properties/borrowed-family-money-to-buy-realestate-here-in-the-us-can-i-deduct-the-interest-and-do-i-need-a-contract/comment-page-1#comment-2355 MVD34 Sun, 28 Feb 2010 13:48:59 +0000 http://www.zo0om.com/realestate-properties/borrowed-family-money-to-buy-realestate-here-in-the-us-can-i-deduct-the-interest-and-do-i-need-a-contract#comment-2355 In general, the answer is yes you can deduct and yes you need a contract but it can be a simple one...although I think you should talk to a CPA or a tax attorney to ensure that there are no complications because (1) you are not yet married, and (2) she is not a US citizen. What you (as a citizen) would need is (1) a deed of ownership (I own a house), (2) a statement of mortgage interest (I paid mortgage interest), and (3) earned income (from which you can deduct the interest expense). As a practical matter, you do not generally need to send any of these things in with your tax form. You only need to produce them to prove the legitimacy of your deduction if you are audited. In terms of family loans there are two "gotchas." (1) the interest is taxable income (in the US) to the payee. If they are not claiming the interest as income on their taxes, you are going to get them in trouble. (2) The interest rate must be competitive or the payee's interest will be assessed under the gift and estate tax law. (Note on (2): if you can get a loan from a bank at 9% and your in laws are charging you 2%, the difference is a gift and it may be a taxable gift. I am simplifying, but that's the gist)<br><b>References : </b><br> In general, the answer is yes you can deduct and yes you need a contract but it can be a simple one…although I think you should talk to a CPA or a tax attorney to ensure that there are no complications because (1) you are not yet married, and (2) she is not a US citizen.

What you (as a citizen) would need is (1) a deed of ownership (I own a house), (2) a statement of mortgage interest (I paid mortgage interest), and (3) earned income (from which you can deduct the interest expense).

As a practical matter, you do not generally need to send any of these things in with your tax form. You only need to produce them to prove the legitimacy of your deduction if you are audited.

In terms of family loans there are two "gotchas." (1) the interest is taxable income (in the US) to the payee. If they are not claiming the interest as income on their taxes, you are going to get them in trouble. (2) The interest rate must be competitive or the payee’s interest will be assessed under the gift and estate tax law.

(Note on (2): if you can get a loan from a bank at 9% and your in laws are charging you 2%, the difference is a gift and it may be a taxable gift. I am simplifying, but that’s the gist)
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]]> By: sporregar http://www.zo0om.com/realestate-properties/borrowed-family-money-to-buy-realestate-here-in-the-us-can-i-deduct-the-interest-and-do-i-need-a-contract/comment-page-1#comment-2354 sporregar Sun, 28 Feb 2010 13:30:59 +0000 http://www.zo0om.com/realestate-properties/borrowed-family-money-to-buy-realestate-here-in-the-us-can-i-deduct-the-interest-and-do-i-need-a-contract#comment-2354 I think it can only be declared and deducted if the lender sends in the proper paperwork to the US govt agencies. I never need to show a contract but I got my loan through a bank so they report it and I confirm the amount when I declare it.<br><b>References : </b><br> I think it can only be declared and deducted if the lender sends in the proper paperwork to the US govt agencies. I never need to show a contract but I got my loan through a bank so they report it and I confirm the amount when I declare it.
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