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P2P lending has another pretty big issue with how it interacts with tax law. The short story is that the interest you earn is ordinary income, while losses from
by ThrustVectoring 8y ago
P2P lending has another pretty big issue with how it interacts with tax law. The short story is that the interest you earn is ordinary income, while losses from defaulted notes are capital losses that do not offset (past a maximum of $3000 in capital losses annually, at a lower rate).
- r00fus 8y agoI got bit by this on Prosper. Until the loan taxation can be resolved you're in a bad space when not incorporated as a lender.
- ThrustVectoring 8y agoYou can invest inside a traditional or Roth IRA, which mitigates everything. But your retirement accounts should probably be heavily biased towards stock market index funds anyhow, so that doesn't really help that much.