"Real" private loans tax deductible?

[md2011]

I think private loans that everyone talks about is the loan from banks and private institutions. I wonder what if I can find some relatives to borrow money from (won't it be nice to give the high interest to your own people?), when I pay back these loans, can I get the same kind of tax deduction as the other formal loans?

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[edmadison]

I think private loans that everyone talks about is the loan from banks and private institutions. I wonder what if I can find some relatives to borrow money from (won't it be nice to give the high interest to your own people?), when I pay back these loans, can I get the same kind of tax deduction as the other formal loans?

IRS excludes loans from relatives. See IRS publication 970 for details

ed

 

[studentloanman]

The money is so easy to borrow and the interest usually isn't that high anyways. . . you don't really need to go to a relative.

I give people advice on this stuff all day long.

Also, the there's a difference between the interest on the FFELP loans (which are often from private lenders) and private loans or alternative loans (which are also from "private lenders"). . . When it comes to tax deductions, I always recommend my clients talk to a CPA who REALLY knows the law (maybe 5% of CPAs are helpful beyond simply filling out paperwork). . .