Using Family Members Equity
I am thinking of using some of my parents home equity for my investing. If anyone has done this, How has it worked out? My parents will borrow
me the money but want to be hands off. For instance, any interest I pay
them I would like to pay cash so they dont have to worry about 1098s and
such. I really dont want to show them having any income from this. They
dont want to be going to the bank multiple times to sign papers and things
like that. What are your thoughts? Thanks.
Well I dont know where the risk for me comes in but I am thinking absorbing the interest would be well worth having quick access to cheap money that wouldnt have to be backed by the property at all. Am I missing something?
Thanks for the response. Sounds like you have this down pat. My only problem is I dont have a company yet. I do this in my name. I dont know how complicated this is to do but I would hate for it to slow me down or cost a lot to set up. THanks again.
I agree with every syllable Brenda said.
Absolutely.
[addsig]
Thanks. I agree with you as well. I do have a little experience and although I am an advocate of not working with family, I am very close with my parents and would do whatever I had to insure they didnt loose money. Will it work?
If they are actually loaning you money and you do not have a stated interest loan document of some sort the IRS will use what they call IMPUTED INTEREST to calculate how much interest was earned and should have been reported at Income Tax time. Also if it is a gift of a loan over 11000 per individual...then the excess could be taxed as a gift. Mom and dad gifting 22000, anything over that is taxable as gift. Doing things on a cash basis does not relieve anyone of properly reporting income and interest earned.