Loan to family member in Canada
I am residing in USA. I am considering loaning USD 50K to my brother in Canada to help him buy a home. Whats the best way to go about this? I read that if its within US its best to do this a loan agreement and charge an interest. Since my brother (borrower) is in Canada, is this still the best way to loan him money.
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I guess my question is what documentation (IRS forms) are to be submitted to IRS both while giving the loan and when he pays back.
None.
In this case, it works on the honor system: since you'll be earning interest, and that will be income, you'll have to account for it on your 1040 (though I don't know exactly where, since TurboTax handles my taxes), even though you won't get a 1099 from him.
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