Family & Friends Mortgage

Anytime a lender and borrower can agree on rates and terms, it can be a good match but IRS has specific rules that govern the transaction especially when the parties are family or friends.26614035-250.jpg

The loan must be done in a business-like manner with a written note specifying the loan amount, interest rate, term and collateral. IRS requires that the mortgage be a recorded lien to allow the interest deduction.

Sometimes, a friends and family situation might have a less than normal interest rate on the mortgage. However, the rate charged in the note is regulated by the minimum applicable federal rate which is published monthly by IRS based on current Treasury securities. For July 2017, the rate is 2.57% for terms over nine years.

The seller must report the interest paid to them along with the name, address and Social Security number on schedule B when the buyer uses the property as their principal residence. A mortgage between family and friends can be good for both parties. It may allow the borrower a slightly lower rate without the expenses of a traditional lender while giving the note holder a higher rate than they can earn in available investments.

Your tax professional can guide the transaction whether you’re a buyer or a seller and your real estate professional can help arrange to have the documents drawn and filed.

Advertisements

About abolastig

Antonio Bolastig is one of the most dedicated and committed real estate agents in the nation. There are many qualities and skills that go into being an excellent real estate professional - integrity, in-depth community and market knowledge, marketing savvy, effective negotiation skills and a high-quality professional network, all of which are hallmarks of how Antonio work. That said, in Antonio''s experience as a real estate professional, hehas also found that providing the very best service is essentially about putting his clients first. This means keeping himself accessible, being a good listener as well as a good communicator, and responding quickly to his clients'' needs. This "client first" philosophy has always been his approach and it requires him to continually improve his skills and ways of doing business. In addition, Antonio has found that the latest technologies are enabling him to do everything he has always done, only much more quickly and efficiently. They''ve also helped him to extend the range of services he provide to his clients. Antonio is backed by Realty Mark LLC, recognized as a leading real estate company with the most productive sales force in the industry. So when you decide that you''d like to buy or sell a home, please contact Antonio Bolastig.
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s