Today TaxMama hears from Camilla in Georgia who is concerned. “My sister is wiring money to me from oversea as a loan, so I can buy a house. Do I need to report it? And more importantly to pay tax on it?”
Get some solid paperwork from your sister about this loan. Including a promissory note showing the amount of interest and monthly payments that are due.
Also, if you want to take a deduction for mortgage interest, this loan must be secured against your home. You can get free forms at www.publiclegalforms.com :
Deed of trust
Promissory note – real estate (by state)
You may need an attorney to write up the documents properly and to record them.
The good news is, do it all correctly and not only won’t you pay tax on this money – you will even get a tax deductions for your interest payments.
And remember, you can find answers to all kinds of questions about funds from overseas and other tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]
- Ask TaxMama :: Where taxes are fun and answers are free
- www.TaxQuips.com :: The number ONE free tax podcast online
- PublicLegalForms :: Get free legal forms – some are state-specific
- PublicLegalForms :: Deed of Trust
- PublicLegalForms :: Promissory Note for Real Estate – select your state