R1 000 000 loan from a friend

[Napalm2880]

A family friend offered to loan me R1 million interest free to purchase a house. Obviously we'll have a detailed written agreement in place for the repayments, the term, annual increases in repayment, etc.

I'd like to know what the tax implications are for lending this amount? I also heard somewhere that he has to register as a credit provider? Not sure how true this is?

 

[Electric]

Interest free loan?
How does he propose not paying his own interest?

 

[Bernie]

A family friend offered to loan me R1 million interest free to purchase a house. Obviously we'll have a detailed written agreement in place for the repayments, the term, annual increases in repayment, etc.

I'd like to know what the tax implications are for lending this amount? I also heard somewhere that he has to register as a credit provider? Not sure how true this is?

With such a large amount you should get a lawyer to help, they will obviously answer all your questions.

 

[TehStranger]

Sounds like your friend is soft in the head.

 

[Alton Turner Blackwood]

Interest free loan?
How does he propose not paying his own interest?

Huh? If I own 5 million and lend 1 million to someone I don't see where or to who I am required to pay interest. Maybe I'm missing something

 

[SinghDude]

Sounds like your fried is banging your SO

 

[Batista]

Is it your first house? Congrats!

 

[Electric]

Huh? If I own 5 million and lend 1 million to someone I don't see where or to who I am required to pay interest. Maybe I'm missing something

Paying out R1 000 000 from any account will require some form of interest or tax %.

 

[saor]

Paying out R1 000 000 from any account will require some form of interest or tax %.

The interest from your other R20 000 000 would surely cover it?

 

[Batista]

Op, are you unable to obtain a loan at the banks or SAHL?

 

[Electric]

That's assuming you have the R20 000 000?

Either way, it's still interest or tax that would be paid by the provider of the loan.
Interest he is not being charged.

He must be doing some super favors for the guy giving this loan.

The interest from your other R20 000 000 would surely cover it?

 

[IzZzy]

There is no requirement that interest must be charged. Interest free loans are common too, just not with commercial banks of course.

I would suggest you get an attorney involved. Fair bit of paperwork involved.

 

[Messugga]

That's assuming you have the R20 000 000?

Either way, it's still interest or tax that would be paid by the provider of the loan.
Interest he is not being charged.

He must be doing some super favors for the guy giving this loan.

...You're not making sense. At all.

 

[Sinbad]

Name and phone number of friend please.

 

[Rocket Raccoon]

Name and phone number of friend please.

We all need it

 

[Electric]

...You're not making sense. At all.

Maybe I'm confused.
If the OP is paying the transfer fee or whatever tax is required to transfer the money then fine but otherwise it would be the responsibility of the person giving the loan.

 

[marine1]

Sounds like your fried is banging your SO

thought the same

 

[JStrike]

A family friend offered to loan me R1 million interest free to purchase a house. Obviously we'll have a detailed written agreement in place for the repayments, the term, annual increases in repayment, etc.

I'd like to know what the tax implications are for lending this amount? I also heard somewhere that he has to register as a credit provider? Not sure how true this is?

Normally you might be liable for donations tax, but since it is operating as a loan, it should be fine

 

[Paul Hjul]

the main difficulty you are looking to run into is that the National Credit Act. Have a look at: http://www.saflii.org/za/cases/ZACC/2012/29.html

An interest free loan could also be viewed by SARS as a transaction where your friend is donating market related interest to you.

 

[mh348]

the main difficulty you are looking to run into is that the National Credit Act. Have a look at: http://www.saflii.org/za/cases/ZACC/2012/29.html

An interest free loan could also be viewed by SARS as a transaction where your friend is donating market related interest to you.

Rather ask Your friend to purchase the House and then sell it to You at a small profit..