Private Lending and Tax Implications

[Brian Bonetta]

I am interested in private lending my capital out to real estate investors, but I'm not sure if there is better more tax efficient way of lending that would reduce my tax burden. My capital is not located in IRA'S, 401K, or any other investment class. I would be wanting to invest 100% cash. Any advice?

*This is a preliminary question to gather more info prior to consulting a CPA.  

[Basit Siddiqi]

@Brian Bonetta

1) It may be better to lend from a SDIRA or Solo401k. It doesn't seem like you have funds in either but something to consider for the future.

2) Is your lending at the level of a trade or business? If this is yes, you may be eligible to write off some items to come up to ordinary income. Some negatives come with this so best to talk to your accountant.