Is it a loan or a "loan"? Very different tax treatment.
If a sister loans another sibling 250,000 and it's a 'loan' that is to be paid back at 1250 a month.....is there a tax liability if the loan is without interest? the loaning sibling is much older and the younger recipient could outlive her with outstanding monies owed.
Sounds like a "loan"...I would say the thinking is (if it is a loan) the loan 'falls away' if the lender pre-
There's no 8%. It's not a loan from an employer at preferable rates.I believe Revenue calculate the rate at the default rate 8% per year or the different of this figure minus the % you have agreed to pay.
Hi Not a tax adviser here.
My understanding is as follows.
1. Contacts need to place to confirm this is a Loan and NOT gift. ( Keeps all parties in clear at to whats going on)
2. If you get interested in free Loan. There is Technically a taxable benefit to you. That should be declared to revenue every year. I believe Revenue calculate the rate at the default rate 8% per year or the different of this figure minus the % you have agreed to pay.
example interest-free revenue calculate the benefit at 8% per year.
Low rate loan 2% - revenue rate 8% leave 6% taxable benefit t6o be payed
Their view is you have the benefit of the use of €250K so it needs to taxed.
Speak to a Good tax adviser about this and get contracts drawn up.
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