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Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 3801
Experience:  20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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I have interest income from an unsecured loan that was used

Customer Question

I have interest income from an unsecured loan that was used for investment property by the persons I lent the funds to. The payment of the principal and interest was based on the sale of the investment property and a lien was placed on the property until paid. Is there a way to reinvest the interest income I gained to avoid paying tax or can it be taxed at a long term capital gain tax rate?
Submitted: 1 year ago.
Category: Tax
Expert:  Barbara replied 1 year ago.
Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.Unfortunately, interest income is taxed at your ordinary income tax rate. You cannot re-invest the interest income to defer/avoid paying tax, and the interest income cannot be taxed at the long-term capital gains tax rate.Please let me know if I can assist you further.Thank you and best regards,Barb
Expert:  Barbara replied 1 year ago.
Just following up with you to see if you have any other questions or concerns. If so, please come back to me here, and I will be happy to assist you.Thank you and best regards,Barb