Taxes on Private/Hard money loans?
Does anyone have professional guidance regarding how taxes work regarding private lenders or hard money lenders? I was on both sides of this question last year and have not yet filed my taxes.
Two scenarios to consider:
1. I borrowed $100,000 @ 8% for 12 months, ending April 2017. I've paid this in full when I sold the property. Is the full $108,000 a deductible expense on the Flip? Is there any required documents I'll need to provide my accountant?
2. I loaned $40,000 to another investor at 20% interest. I was in 2nd position and they were desperate... I received full payment in September 2017. Do I have to claim the $8,000? If so, how do I report it? Ordinary income? Capital Gains? What documents will I need to provide, if any, to my accountant?
Thanks in advance!
Ronny