Announcement

Collapse
No announcement yet.

loan between spouses

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    loan between spouses

    New client. Husband says he received a loan from his wife to purchase a rental property. The spouses will file jointly. The husband wants to deduct the interest paid to his wife on the Schedule E. She will include the interest income on a Schedule B. This seems weird to me. Why bother with the interest, and is this even the correct treatment?

    #2
    Under today's tax laws it may be more expensive following their wishes, NIT to name a few. Not knowing what the future brings, such as filing MFS, keeping track of the unpaid balance due is important. BUT that can be done easily simply with an amortization schedule and loan repayments made.

    This is not uncommon with second marriages where individual wealth is kept separate. Yes it appears to be foolish but the impact will be minimal at best.
    This post is for discussion purposes only and should be verified with other sources before actual use.

    Many times I post additional info on the post, Click on "message board" for updated content.

    Comment


      #3
      Nothing wrong with it at all. Just make sure the interest deduction is the same as the interest income.
      Roland Slugg
      "I do what I can."

      Comment


        #4
        Can't Do It

        The spouses can do whatever they want but it would not show up on the tax return unless they file MFS.

        Comment


          #5
          Yes

          Originally posted by Kram BergGold View Post
          The spouses can do whatever they want but it would not show up on the tax return unless they file MFS.
          And must adhere to amortization schedule with payments.
          Always cite your source for support to defend your opinion

          Comment


            #6
            Originally posted by BP. View Post
            New client. Husband says he received a loan from his wife to purchase a rental property. The spouses will file jointly. The husband wants to deduct the interest paid to his wife on the Schedule E. She will include the interest income on a Schedule B. This seems weird to me. Why bother with the interest, and is this even the correct treatment?
            Not sure, but I don't think he can deduct the interest on Sch E unless the loan is secured by the property. Otherwise, I think it would be investment interest on 4972.
            You have the right to remain silent. Anything you say will be misquoted, then used against you.

            Comment


              #7
              Great point..................
              This post is for discussion purposes only and should be verified with other sources before actual use.

              Many times I post additional info on the post, Click on "message board" for updated content.

              Comment


                #8
                Yes

                Originally posted by WhiteOleander View Post
                Not sure, but I don't think he can deduct the interest on Sch E unless the loan is secured by the property. Otherwise, I think it would be investment interest on 4972.
                yes, an "arms-length transaction" - legally binding contract, amortization schedule, etc. (separate lawyers)
                Always cite your source for support to defend your opinion

                Comment

                Working...
                X