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purchased a rental property early this year with $ 250,000 all cash, of which $ 200,000 was borrowed from my aunt, who is not an American citizan and lives in overseas. I am now the owner and the landloard of the house. For this house, I pay property tax, all property-related expenses, and $ 800 every month to my aunut’s bank account as private loan interest (about 5% of the loan amount). All the loan agreement, money wiring, and monthly depoisted interest are documented. My question is: When I file tax return, can I dedudct the interest paid to my aunt from my taxable income?

2 Thoughts on Can interest paid for private loan be deducted from taxable amount in filing tax return?
  1. Reply
    February 16, 2014 at 2:39 pm

    The interest on the loan qualifies as a mortgage deduction against the rental property income on Schedule E line 12 or 13.

  2. Reply
    February 16, 2014 at 3:37 pm

    Before you write down the interest payment on your taxes, talk to a CPA or a tax professional for a valid answer.

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