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Income from a Loan

Submitted by donald.thompson... on 10 March 2007 - 3:39pm

I've loaned money to a child that she used to buy a home. She pays an amount each month which is taxable to me (interest) and part which is return of principal and not taxable. This loan will continue for 15 years. How do I enter the income? I thought of entering the interest payments and the principal payments as separate special receipts but there is no way to negatively "grow" the interest amount since this decreases every year. Must I enter each year's interest & principal and select "in dollars" for each?

Thanks
James

‹ How do you input two different special receipts for the same years. Special Receipt not showing up in report ›
Submitted by donald.thompson... on 17 October 2008 - 3:14pm.
1

This question was never addressed. I'm also not certain how to enter the taxable finance charges from this loan. In the "Special Reciepts" screen, item #4, Should the Finance & Principal payments be entered for future years "in dollars" or "in today's dollars?" It doesn't matter for the current year.
Thanks
James

Submitted by Dick Munroe on 18 October 2008 - 7:39am.
2

james300 at pacbell.net wrote:This question was never addressed. I'm also not certain how to enter the taxable finance charges from this loan. In the "Special Reciepts" screen, item #4, Should the Finance & Principal payments be entered for future years "in dollars" or "in today's dollars?" It doesn't matter for the current year.
Thanks
James
Odd, sorry about missing it. There are two special receipts, one for the principal (not taxable), one for the interest (taxable). Both are in dollars, not today's dollars because your child is paying you back a fixed amount every period without adjusting for inflation, which would be today's dollars. It's the reason that, assuming your earning keep up with inflation, that 30 year mortgages are such a good deal. You get to pay them off with inflated dollars.

Best,

Dick Munroe

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