Parents are acting as the HARD MONEY LENDERS

Tax, SDIRAs & Cost Segregation
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Parents are acting as the HARD MONEY LENDERS

Andrew PettitPro Member
Rental Property Investor · RI · Member since 2017 · 100 posts · 19 votes

Hey BB,

        I am wondering what will the tax implications be if they act as the 'Hard Money Lender.' Is there a way to shelter them from the tax burden and how should I go about this any tips? 

Thanks. 

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Steve Hall
Rental Property Investor · TX · Member since 2019 · 303 posts · 364 votes
7y

@Andrew Pettit They can give you a gift you up to $15,000 per year. If you're talking about borrowing more than that, you should be consulting with an attorney AND an accountant.

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  • Steve Hall
    Rental Property Investor · TX · Member since 2019 · 303 posts · 364 votes
    7y

    @Andrew Pettit They can give you a gift you up to $15,000 per year. If you're talking about borrowing more than that, you should be consulting with an attorney AND an accountant.

    2Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
    7y
    Originally posted by @Andrew Pettit:

    Hey BB,

            I am wondering what will the tax implications be if they act as the 'Hard Money Lender.' Is there a way to shelter them from the tax burden and how should I go about this any tips? 

    Thanks. 

     If this is no interest component, you need to impute interest. 

    However, if loan is below 100k and your, borrower, net investment income is below 1k, there is no imputed interest calculated. 

    Generally, if 0% interest is not intended, then parents will recognize interest income on lending. 

    [email protected]941-914-7779
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  • Carl FischerPro Member
    Rental Property Investor · Ambler, PA · Member since 2015 · 2k+ posts · 1k+ votes
    7y

    @Andrew Pettit

    Parents will pay the taxes on the interest you deduct. @Steve Hall gave you a tip “contact a cpa/attorney to help”. 

    [email protected]215-283-2868
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  • Andrew PettitPro Member
    OP
    Rental Property Investor · RI · Member since 2017 · 100 posts · 19 votes
    7y

    Hey Steve,

                Thanks for the response it is definitely an accounting issue. 

    0Reply
  • Andrew PettitPro Member
    OP
    Rental Property Investor · RI · Member since 2017 · 100 posts · 19 votes
    7y

    Thanks gentlemen 

    0Reply
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