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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29793
Experience:  Taxes, Immigration, Labor Relations
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Me, my wife, and her mother bought a residential property.

Customer Question

Me, my wife, and her mother bought a residential property. The property was paid in full. All of our names are ***** ***** deed. We then got a mortgage for the property to renovate the house. The mortgage is in my Wife and mother in laws name. If she gives me money from the loan (Mortgage) to renovate the house is that considered income.
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

The loan is NOT a taxable income.
Simply because under regular circumstances that amount is expected to be paid back.
Thus as long as the loan realistically is expected to be paid back - there is no taxable income.

Expert:  Lev replied 1 year ago.

If you are getting the money from your mother in laws - we need to consider - if you are obligated to pay that amount back?
If yes - that is a loan - and no need to include it into your taxable income.
If you are not expected to pay it back - that is a gift and the gift is not taxable either.
But if the gift is above $14,000 per person per year - the donor will need to file a gift tax return - but most likely - there will not be any gift tax liability.

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