Tax Law (Questions About Taxes)/Loan repayment taxation


Hi John,

I'm new to this but I'm trying to help out a friend. I'm planning on buying a home for a friend for $75000 and allowing my friend to pay me back over 20 years at 8% interest. What taxes would I be subject too? Would I have to provide something to my friend every year to show they made these payments?

Thanks for any guidance,


Thanks for your question.

I assume you are selling the house to your friend for your cost. If this is the case, the only income your would have to report and pay taxes on is the interest income your friend pay you. You should file a lien on the property to protect yourself against default and also to allow your friend to deduct the interest paid as mortgage interest.

Since you are not in the business of lending, you do not have to file a 1099-INT, but you should provide the borrower a statement annually of the amount of interest paid each year.  Also provide your mailing address and social security number, which your friend will need in order to claim the deduction.  You can secure an amortization table showing the breakdown of principle and interest for each payment by doing a simple Google search.

Hope this helps.

John Stancil, CPA

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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