Five years ago I bought my house. I borrowed 100,000 from the trust left by my father. I have just refinanced the house in order to pay that money back to the trust (my mother). Will my mother be taxed on that money if I pay her back in a lump sum? She is wanting to leave it accessible instead of putting back into trust.

Thank you,
M

No, your Mother would not be taxed on monies that were repaid to the Trust. The reason is that the repayment is not part of income and thus non-taxable to the Trust.

But, I am assuming that the Trust reported the loan paid out to you 5 years ago and that you have paid some stipulated interest on the loan taken out from the Trust for the last 5 years that the loan has been outstanding.

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