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?
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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.
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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
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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
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Yes
And must adhere to amortization schedule with payments.Originally posted by Kram BergGold View PostAlways cite your source for support to defend your opinionComment
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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.Originally posted by BP. View PostYou have the right to remain silent. Anything you say will be misquoted, then used against you.Comment
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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
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Yes
yes, an "arms-length transaction" - legally binding contract, amortization schedule, etc. (separate lawyers)Originally posted by WhiteOleander View PostAlways cite your source for support to defend your opinionComment
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