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Old 07-20-2006, 01:09 PM
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Question

Gift tax and personal loan

What is the name of your state? New Jersey
My mother said she will loan me money above the yearly allowable gift amount. I will be paying it back on a monthly basis. Does this need to be reported on form 709?
  #2  
Old 07-20-2006, 01:17 PM
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Quote:
Originally Posted by CathyNJ
What is the name of your state? New Jersey
My mother said she will loan me money above the yearly allowable gift amount. I will be paying it back on a monthly basis. Does this need to be reported on form 709?
The amount of the loan matters not.

A loan is not a gift.

The gift is the amount of interest your mother is forgiving you, in addition to any forgiveness of principle.

Those would be made in the years they occur.

Consult the IRS website or taxpayer information line.
  #3  
Old 07-29-2006, 02:24 AM
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Location: Washington
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She needs to charge you a 'reasonable' interst rate. If the loan is interest-free, the forgiven interest is also a gift. This may put her over the $12,000 annual exclusion.
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