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Relative Wants to Lend Mortgage Money & Charge NO interest

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janisnic

Junior Member
What is the name of your state?What is the name of your state? Florida

Please advise as to best way to accomplish lending a close relative who has proven to be sound & responsible in handling all his affairs. Lender relative was told by a financial planner that she HAS to charge a reasonable amount of market interest (6%) otherwise IRS will consider it a gift to the borrower. How can we get around this issue without legal problems? Lender is VERY upset about the gov't telling her what she can and can't do with her hard AFTER TAX earned & saved money! This is a GREAT opportunity for the borrower & it would be good to see him gain credit history & homestead exemption. $500 principal (which is fine with the lender relative) is all he could afford because he will have taxes, homeowner's insurance & repairs along with his other monthly expenses on top of it.

Real estate in FL is rapidly increasing & we are afraid that home or condo owning will be unreachable for this borrower if he doesn't act soon. He has a $12,000 savings account in reserve for rainy days.

Thank you for your help and time, which is priceless! :)
 


HomeGuru

Senior Member
janisnic said:
What is the name of your state?What is the name of your state? Florida

Please advise as to best way to accomplish lending a close relative who has proven to be sound & responsible in handling all his affairs. Lender relative was told by a financial planner that she HAS to charge a reasonable amount of market interest (6%) otherwise IRS will consider it a gift to the borrower. How can we get around this issue without legal problems? Lender is VERY upset about the gov't telling her what she can and can't do with her hard AFTER TAX earned & saved money! This is a GREAT opportunity for the borrower & it would be good to see him gain credit history & homestead exemption. $500 principal (which is fine with the lender relative) is all he could afford because he will have taxes, homeowner's insurance & repairs along with his other monthly expenses on top of it.

Real estate in FL is rapidly increasing & we are afraid that home or condo owning will be unreachable for this borrower if he doesn't act soon. He has a $12,000 savings account in reserve for rainy days.

Thank you for your help and time, which is priceless! :)

**A: well, get another opinion or 2 from a CPA and a real estate tax attorney...........it won't hurt.
 

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