Our goal is to make intra-family loans safe, easy, and successful.
Why use National Family Mortgage? There are plenty of reasons!
Prevent IRS scrutiny. The current IRS annual gift tax exclusion is $15K per person. In order for an exchange of family funds to be considered a legitimate loan and not a potentially taxable gift, you must properly document the transaction as a loan and also report earning interest at a rate equal to or above the minimum rate required by the federal government, called the Applicable Federal Rate (AFR). Even if you document the loan, but report earning less than the appropriate AFR, the IRS may impute the interest as income and also view the forgone interest as a taxable gift.
National Family Mortgage ® coordinates the registration of your loan with the proper government authority. This will allow your Borrower to continue to legally deduct their mortgage interest payments from their federal tax return – just like with a bank mortgage. (They cannot legally deduct the interest payments on non-registered loans – even if the money is used to refinance a bank mortgage.)
Proper documentation sets clear expectations and prevents future misunderstandings. If anything happens to you, your registered mortgage documentation also protects the interests of your other children or family members who could be affected by the proper accounting of the loan. Our optional loan servicing platform reduces awkward conversations, provides year-end tax statements for the IRS, and keeps everything business-like.
A Strong Investment Vehicle
What are your bonds or CDs paying these days? Invest in a loved one; intra-family loans can earn solid returns. Help a loved one refinance a bank mortgage and keep your money in the family. The emotional returns are strong, too.
Monthly Income Stream
Your National Family Mortgage ® will generate a recurring monthly cash revenue stream from payments by your Borrower. This is an attractive feature relative to many other investments. Reinvest the money or spend it however you choose.
You can rest assured that your investment is protected with a registered mortgage lien as filed with the proper government authority. This can be especially important when an unforeseen event occurs, such as the death of the Borrower, or a Borrower’s divorce.