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  1. #11
    Join Date
    Oct 2014
    Posts
    8,238

    Default Re: How to Create a Binding Personal Loan Agreement

    Quote Quoting debins
    View Post
    Thank you very much for the feedback.

    To make sure I understood correctly: If I give more than $14,000 loan to my wife, the “gift loan problem” is not applicable/valid here. That is, neither of us (I and/or my wife) need to pay any taxes, on this loan or on its interest. Therefore, I can give $100,000 as loan to my wife and get exactly $100,000 back from her after 2 years and neither of us need to pay any tax on this loan/its interest; and neither of us face any “gift loan problem” due to this. In other words, I can give whatever amount I wish as a loan to my wife with 0% interest.
    Please let me know if my above interpretation/understanding is correct.
    IRC section 7872(f)(7) specifically states that for the below market loan rules a husband and wife are treated as one person. Thus, any loans between the two of them will be disregarded for the gift loan rule. This means you can loan her any amount interest free and not have to worry about the gift loan situation.

  2. #12
    Join Date
    Aug 2017
    Posts
    7

    Default Re: How to Create a Binding Personal Loan Agreement

    Many thanks and I appreciate your confirmed answer!

  3. #13
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: How to Create a Binding Personal Loan Agreement

    Quote Quoting debins
    View Post
    Thank you very much for the feedback. I need to give the money as loan but not as gift to my wife.


    To make sure I understood correctly: If I give more than $14,000 loan to my wife, the “gift loan problem” is not applicable/valid here. That is, neither of us (I and/or my wife) need to pay any taxes, on this loan or on its interest. Therefore, I can give $100,000 as loan to my wife and get exactly $100,000 back from her after 2 years and neither of us need to pay any tax on this loan/its interest; and neither of us face any “gift loan problem” due to this. In other words, I can give whatever amount I wish as a loan to my wife with 0% interest.
    Please let me know if my above interpretation/understanding is correct.

    This forum is very helpful.
    Yes, your interpretation is correct.

  4. #14
    Join Date
    Aug 2017
    Posts
    7

    Default Re: How to Create a Binding Personal Loan Agreement

    Many thanks again.

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