Lending money to a family member can be an option to prevent them from paying interest to the bank. However, it is necessary to make it fair (legal) for both to cover their backs: there is no need to pay taxes, only to inform the Ministry of Finance. For everything to be legal, the donation must be made before a notary in a public deed and the corresponding tax must be paid later. Although an interest-free loan between family members is possible, it is important that the legal activity is exactly the same as a regular loan. This means that the borrower must regularly repay the agreed amount. When we find ourselves in a time of economic difficulty, it is customary to ask for help from relatives or relatives before going to the bank. But is it possible to lend money to a family member without being accountable to the Treasury? The answer is yes, but you need to do it by following a series of steps to avoid problems. A woman lent money to her brother because he lacked a very small amount of money to open a restaurant, and he didn`t want him to take more risk on the account by borrowing money from the bank. After all, starting a business in Spain is already a complicated adventure, so why make it harder to ask for money from those who charge high interest rates? There are those who even apply for loans from fast credit institutions whose interest rates are even higher. First of all, we must consider why this person needs money, because depending on the reason, you can recommend other types of solutions than asking a family member for money. For example, you can also apply for loans or other types of loans, negotiate with creditors if money is due, or apply for project financing. But also remember that you can also recommend your child or a family member to apply for a free loan.
Today, there are many companies dedicated to financing. The best thing about these options is that they are 100% legal and provide answers in minutes, without the need to send difficult documents, regardless of the autonomous community and without going to a public act. We are talking about a© pawnshop. The scheme is simple. We will not lend him the money, we will lend him a bank, on the agreed terms. To ensure that these are as tight as possible, the potential lender who does not deposit a deposit of the same©amount as collateral for the loan©sets out. The bank recovers the loan like any other, and in case it is not paid, it can execute the guarantee by canceling the remaining loan©©against the deposit. As explained earlier, the Treasury Department must file Form 600, the tax on transfers of assets, and documented legal acts, in addition to three copies of the contract. The regulations state that this is an essential procedure that must be followed, even if you do not have to pay anything. This documentation is kept with the payments paid on the loan until final settlement. This way, if the Department of Finance is claiming you for hidden loans or fraud, you can prove that it is a family loan that has complied with the formalities in force.
In order to fully understand the number of family or peer-to-peer loans, it is important to distinguish between donation and loan. If you want to help a family member financially, or if you are the one who needs this help, there are two ways to do it: through a donation or a loan. We hope this article has helped you resolve your doubts about how to lend money to a family member. If you plan to lend money to a family member soon and need help preparing your contract, contact us! At Credexia, a team of professionals is at your disposal. Before explaining how to proceed with the treasure when lending money to a parent, it is important to know how to distinguish between gift and loan. When it comes to helping a loved one financially, it can be done in two different ways: Lending money to parents or children is common. Helping a loved one who is going through economic hardship is an option that hundreds of people turn to. The problem arises when this money is not returned within the allotted time, or worse, the debt is never paid.
Perhaps this is why we have so many doubts about lending money to an individual. However, for the one who has the money, it is not without problems to lend it to a family member or friend, so without making a transfer or delivering it in cash. What happens if it is not returned? Is the Department of Finance not aware of this type of transaction to claim taxes? Of course, if the money you borrowed was your savings, you may still need it. Although the person you have helped has the best will in the world to return this favor, there are many cases where, unfortunately, this person dies and this obligation must be taken over by his heirs, who may not be as compromised. As the name suggests, it is about lending money to a parent, with the particularity that this money must be returned. If this is the case, it is necessary to evaluate the advantages and disadvantages of the chosen formula: lend the money (and therefore determine that it must be returned), pay inheritance and gift tax to the Treasury so as not to wait for it, or do it without the knowledge of the administration, which may present a risk of fines. The first thing to keep in mind is that for the Treasury, whether they have a family connection or not means nothing.