4 ms·
Deduction of interest against revenue isn't allowed in other countries for business purposes? I know the home mortgage deduction might be somewhat unique, but
by bombcar 9mo ago
Deduction of interest against revenue isn't allowed in other countries for business purposes?
I know the home mortgage deduction might be somewhat unique, but interest costs seem a business expense pretty clearly.
- exceptione 9mo agoIn the NL the one who provides the loan is supposed to do that against a normal interest rate, which is a capital gain subject to tax. So this trick would not work here afaik, because now there is still a party paying taxes.
- spwa4 9mo agoWhat about the "default on the loan" backdoor? Would that work? Let's say I sell you my business for $1 million. You give me a loan for $1,2 million. The money is transferred into my account. I pay 2% interest for 10 years and then I default on the loan. You do nothing to recover the money. Tax free sale, no?
- lbreakjai 9mo agoI had a few colleagues in the UK that tried this to avoid taxes. The tax services generally don't look too kindly on that sort of arrangements. Searching for "Loan charge" should surface quite a few distressed stories.
- bombcar 9mo agoIn the USA this is taxed as if the loan was forgiven - so one side or the other pays the tax. There are ways to abuse the bankruptcy laws, but they are difficult and time consuming and usually not worth it.
- nerdsniper 9mo agoYou may be right. I might be misremembering or overgeneralizing some articles about mortgage interest deductions.