Welcome Guest. Register Now!  


Itemized Deductions Schedule-A


Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 01-17-2011, 12:52 PM
Junior Member
 
Join Date: Jan 2011
Posts: 1
reporting about personal loan interest

Hello,

My dad loaned me $400K to buy my second house which will be used as rental property only. There is NO mortage on the house. We have written a promissory note which includes the interest I pay him every month.
Where can I report about the interest I paid him for this personal loan in 2010?

Thank you,



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 02-05-2011, 10:44 PM
Moderator
 
Join Date: Oct 2010
Posts: 5,233
“Where can I report about the interest I paid him for this personal loan in 2010?”----> As you can see, as long as the loan is made to you at a low interest rate( lower than proper market rate), then the IRS may impute interest. This means that your dad MUST recognize interest income equal to the IRS imputed interest, and you, as a borrower, should have an implied interest payment to the lender, your dad. Each month, the IRS publishes applicable federal rate, AFR. Loans to family members (gift loans) fall under the imputed interest rules. IRS imputes interest on the gift loan when the interest charged is LESS than the AFR ( I am not sure if this true in your case).Ifyou pass this rule, then you can report your interest expenses on Sch E of 1040. One of your expenses is depreciation. Be sure to take depreciation9 27.5 years, I guess) because when/if you sell the property it will be be treated as though you had.You may be subject to self-employment taxes and need to pay estimated taxes on your rental income , depending on the situation. You can deduct your mortgage interest as a rental expense.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
reporting mortgage interest saugeye Rental Real-Estate 1 03-11-2009 04:19 PM
Help with tuition and student loan interest cornbread Estimated Taxes 0 07-28-2008 05:34 PM
Can I write off interest expenses on my personal loan used for my Business? JimiGood Sole-Proprietorship 1 03-04-2008 10:34 AM
Are Home Equity loan interest deductible on my personal tax return? Adam Itemized Deductions 1 03-23-2007 11:36 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning