I am considering lending $25,000 to my mother-in-law to buy a car while she awaits an insurance check. Once she receives the money, she intends to pay me back. If this all occurs within the same tax year, do I have to pay the gift tax, or any taxes?

ANSWER

Expert Mark Anderson's Answer:

If it is a loan, then you would not have to pay a gift tax. I would make sure it is structured as a loan so you are protected. You should have her sign a promissory note that pays interest and grant you a security interest in the vehicle. You would need to report the interest as income. I hope this answers your question.

Mark Anderson, JD

Montana

21 yrs experience

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