Where can you get the best terms on a new loan? Often, it's the family bank, meaning Mom and Dad, your successful big brother or your great aunt Doris. You can usually get away with a low interest rate, or perhaps no interest at all.
Trouble is, loans among family members touch on two areas about which the IRS is especially sensitive: gifts and interest income. To avoid a tax nightmare later, be sure to follow these rules.
- Document the Loan
- Secure the Note
- Establish Solvency
- Set an Interest Rate
- Avoid Imputed Interest
- Demand a Demand Loan
- What if You Default
0 comments:
Post a Comment