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Loans and Family: Do They Mix?

By Roy Lewis (TMF Taxes)
July 15, 2005

If your family is like many, it's just a matter of time before somebody near and dear to you hits you up for a loan. This doesn't necessarily have to be a bad deal. You can help a family member with the capital to start a business, make an investment, pay personal expenses, or even buy a home. And the interest stays in the family, rather than going to some cold, impersonal bank or finance company. So, if done correctly, it can very well be a "win-win" situation.

However, if you decide to make the loan, there are some issues that you should understand relative to family loans and taxes. As with any loan, a loan to a family member should be made in a businesslike manner...
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