Q: If I loan a friend $$$ and 10 years later they finally repaid it, is that taxable to me? (the debt was never forgiven)
I loaned a friend $7,500 10 years ago and now they finally repaid it. The loan was never cancelled or forgiven by me. Now that he finally repaid me, do I have to pay taxes on the repayment of the loan money received?
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A:
Receiving repayment of a loan you made is generally not considered taxable income. The money you lent was already your own, so when it's repaid, you're merely getting back what was originally yours. This principle holds regardless of the time taken for the repayment.
However, it's important to note that if any interest was charged and paid on the loan, the interest received is considered taxable income. In your case, if the repayment was simply the original amount of $7,500 with no additional interest, there should be no tax implications for receiving the repayment.
It's always a good idea to keep records of the loan and its repayment, particularly in situations where significant time has passed. This documentation can be helpful if there are any questions or clarifications needed about the nature of these funds.
For specific advice and to ensure you're in compliance with all relevant tax laws, consider consulting with a tax professional. They can provide guidance tailored to your specific situation.
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