If someone is repaying me the amount of 260,000.17 in a loan I gave them do I have to pay taxes on it?

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  • 1 month ago
    Favorite Answer

    Yes, under US federal tax code, you pay taxes on the interest you "forgave" by not making them pay you anything beyond the principal amount you loaned them.  The "applicable federal rate" for the "imputed tax" would depend upon the length of the loan, among other things, but the 2019 minimum rate is 2.27%.

    That's little over $5,900 for a loan of $260k.

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  • 1 month ago

    interest is taxable.

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  • Eva
    Lv 7
    1 month ago

    A loan principal repayment is not taxable. Any interest you received on the loan is taxable. This would be only if there was not a sale of property involved. There are different rules for installment sales.

    • NA
      Lv 7
      1 month agoReport

      You are forgetting imputed interest.

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  • 1 month ago

    How much was the loan? The interest received is taxable, the principal (what they borrowed) is not. If you loaned $240,000, then $20,000.17 is taxable interest.

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  • Judy
    Lv 7
    1 month ago

    Taxes are due on whatever part of the payment is interest.

    • NA
      Lv 7
      1 month agoReport

      Imputed interest is taxable. 

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  • 1 month ago

    Repayment of a loan is not income any more than withdrawing from a bank account. Any interest is taxable income.

  • 1 month ago

    Only on the interest collected.

  • 1 month ago

    You have to pay taxes on the interest if you are charging them interest, or on the amount of interest that would have been charged if you hadn't loaned them money without interest as a favor. You don't pay tax on the return of the money that you loaned, only on the interest that you either make or could have made.

  • Bort
    Lv 6
    1 month ago

    If you gained income from it you have to pay taxes on it. If you loaned them that exact amount and they gave that exact amount back to you there was no income so you don't have to pay taxes on it. 

    • NA
      Lv 7
      1 month agoReport

      Due to the size of the loan, he has to declare interest on it, even if he didn't charge it.

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  • 1 month ago

    Ask a tax consultant. It might be that you have to pay taxes on the interest or that you paid reduced taxes because when you gave the loan. Not enough info here. Check with someone who does this professionally.

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