I Got The $$, Now What?

I borrowed 20K from my dad to rehab a house, and I told him I'd take care of all the paperwork. What sort of paperwork do I need for him, for me and for the IRS.
He borrowed it out of his HELOC-4%
I'm paying him 10%.
What do I need in the way of "proof" of payment and are there any IRS forms I need to get in order. I'd hate to wait until April 14 next year to worry about this.
Thanks in advance.
Sam

Comments(6)

  • compwhiz4th May, 2004

    You need to give him 1099-INT form @ the end of the year.

  • commercialking5th May, 2004

    you need to prepare a promisory note which outlines the terms of his loan. You can pick up a form for this at any good stationery store or there is probably one in the freebies section here.

  • compwhiz5th May, 2004

    Yes, of course, promissory note is good. However, he was asking specifically about IRS forms. 1099-INT is an IRS form. Promissory note is a private form that IRS would want to look into ONLY if it audits and suspects that something is funky with the interest paid.

  • samedwin5th May, 2004

    I could always fudge the primisory note Ex post facto, (just like I deduct thousands of miles for my car every year - mileage count, LOL)--IF I ever got audited.
    A 1099-INT. Excellent. Thanks a lot.
    Sam

  • joefromphilly5th May, 2004

    Here is a realated question. What if I contribute some money to a rehab deal in a joint venture, but do none of the work? When I get my payoff, how do I report this so I am not paying SE taxes on it?

  • compwhiz6th May, 2004

    Have the entity that holds the money/title to the property give you 1099-DIV or 1099-INT. If you do none of the work, it is considered passive income, and AFAIK, passive income is not subject to SE tax - but check with your accountant or do more research, as I am speaking off the top of my head.

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