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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
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Experience:  15years with H & R Block. Divisional leader, Instructor
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I am a Florida resident with relatives in Europe. My sister

Resolved Question:

I am a Florida resident with relatives in Europe. My sister living in Switzerland wants to lend me 50,000 USD as a short term loan (2-3 years) by sending me a wire transfer from her personal account. From what i read on IRS tax laws I need to pay a minimum interest rate depending on the term length to avoid having this considered a gift or taxable. My question is, is just paying my sister the above minimum interest rate + payments enough or could this have negative (positive?) tax consequences for me?

Thank you in advance!
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Robin D :

Hello and thank you for using Just Answer,
If you receive a loan then your ability to deduct the interest would depend on what the loan was for. If it was for personal (other than home) you could not deduct the interest.
If this is just a gift then you would not have to do anything unless it were more than $100,000. If so, you would just need to report the gift on form 3520.

Robin D :

The interest requirement is for US persons that make a loan. They are required to charge interest (minimal at least). Your sister is not a US person ( I am assuming based on what you have said thus far) and would not be unde rthe US requirement for interest.

Robin D :

As teh amount is less than the $100,000 you would not even need to report if a gift.

Robin D :

In short,you are not taxed on this amount from your sister no matter if it is a gift or a loan.

Robin D :

Your sister (if not a US person) is not required to charge you interest.

Robin D :

Respond and let me know if you need further clarification.

Customer:

thank you for the prompt answer Robin! My sister is not a US citizen and I am living in Florida but not a US citizen yet (visa holder living here for several years and paying taxes). If i understand it correct I would not even have to report the amount if its a personal loan / gift ?

Robin D :

That is correct.

Robin D :

If you were a resident alien then you would need to report (if more than $100,000) but no tax to pay.

Robin D :

The giver (if a US person) pays any gift tax.

Robin D :

not teh receiver

Robin D :

the

Robin D :

Sorry*

Robin D :

Did you need something more on this subject?

Robin D :

I hope this CHAT has been helpful

Customer:

great help! thank you Robin

Robin D :

Your positive rating is always thanks enough.

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7867
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 2 other Tax Specialists are ready to help you

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Robin D.
Robin D.
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15years with H & R Block. Divisional leader, Instructor