FosterParticipantStatus: PhysicianPosts: 17Joined: 03/01/2017
Situation: My practice has a somewhat separate real estate venture. They basically own the buildings we work in and some other commercial real estate. As a partner I am buying into this venture. For simplicity sake, lets assume the buy in is $250K. The practice has loaned me the money at 3% interest. It pays an annual distribution that is more than the cost of the interest – which I pay income tax on.
Over the course of a year I will pay about 3% of 250K this year, or 0.03 * 250,000 = $7500 in interest payments.
Is there any way I can write off this interest as a business expense? If so, what would I need to do? Form some kind of business entity hen claim it as a business expense? Is that possible?
What if I formed a LLC (or some other entity) took out a loan from my bank, paid off the practice loan, then claimed the interest I would be paying to the bank as a business expense?
Any ideas? Thanks
FJuly 11, 2019 at 8:02 pm MST #229691HumbleInvestorParticipantStatus: Physician, Small Business OwnerPosts: 229Joined: 12/28/2016
Second one is perfectly legal. I assume there is a way to structure the first one to make it tax efficient for you.July 12, 2019 at 7:22 am MST #229786FosterParticipantStatus: PhysicianPosts: 17Joined: 03/01/2017
Thanks for the comment. Anyone else have input on this? What is the best way to approach this? (apart from just paying it off asap)
FJuly 13, 2019 at 9:54 am MST #230130jacoavluModeratorStatus: Physician, Small Business OwnerPosts: 2465Joined: 03/01/2018
I don’t know the answer to your question. But regarding the bank loan. What kind of rate can you get? Because if you end up with a bank loan of 4 or 5 or more percent that defeats the purpose of overall dollars saved.
The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVAJuly 13, 2019 at 10:43 am MST #230139