You might assist a young member of the family purchase a very first house or assist a economically challenged general or buddy by loaning that individual some funds. Sweet thought, but it a tax-smart loan if you follow through, please make. This line describes steer clear of tax that is adverse once you make an individual loan to a family member or buddy.
The attention price problem
Many loans to loved ones or buddies are below-market loans in income tax lingo. Below-market means that loan that charges no interest or an interest rate underneath the relevant rate that is federal or AFR. (more…)