What are the tax liabilities for personal loans and gifting of money?
in
Loans
Johnny asked:
If someone were to grant a large personal loan to someone else (100K or larger) what are the tax liabilities or responsibilities of the lender and the borrower – if any?
If someone were to grant a large personal loan to someone else (100K or larger) what are the tax liabilities or responsibilities of the lender and the borrower – if any?
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2 comments
s g on October 27, 2009 at 12:42 pm
There are no tax liabilities on loans, but rather what you buy with the loan.
STEVEN F on October 27, 2009 at 8:06 pm
You don’t mention what country you are in. Under US tax law. The borrower has NO tax related to a loan. The lender would include the interest portion of payments in their total income for tax purposes, and pay the same rate as normal income. In the case of a gift, the receiver has no tax. The giver can give up to $12,000 per year to each recipient with not tax results. Above that amount, a gift tax return must be filed, but up to $1 million can be given in a lifetime before taxes are actually paid.
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