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Do I have to pay taxes on a loan?

Customer Question
This is a loan from...
Do I have to pay taxes on a loan? This is a loan from a friend to buy a house - the loan is in the amount of $60,000.
Submitted: 1 year ago.Category: Tax
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10/14/2016
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 year ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,846
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
No, loan proceeds are not taxable (because they are to be paid back). They are neither deductible by the lender, nor reportable as income by the borrower. However, if the loan is not repaid, then the lender can deduct as a bad debt, and the borrower must pay income on what the IRS calls the net inverse in wealth (forgiven debt – money borrowed and not repaid).
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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,846
12,846 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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