If you are borrowing money to buy a new home, you should take the extra step of legally securing the note with your residence. (This does require a lawyer.) That way you can take advantage of one of the most popular tax deductions: interest on a home mortgage. Anyone thinking of not reporting a family loan when applying for a mortgage should consider this point: You could face criminal charges if you falsify a mortgage application to hide the origin of your downpayment money.
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