Loan to individual to buy rental property with payoff
Person A loans $50K to Person B in 2020 which was used to buy rental property solely in Person B's name. Income/expenses related to rental property were shared in 2020, 2021, and 2022. Person A decided to close out arrangement in late 2022 with the following agreement.
- $45K in stock received from Person B in 2022.
- $15K cash to be received from Person B in 2023.
- $15K cash to be received from Person B in 2024.
Looking for confirmation on the following:
- For 2020 and 2021 the net of Inc/Exp should have been listed on taxes as Interest gain from loan, even though they are from rental property, but there is no true ownership in property.
- For 2022 Inc/Exp net would be stated as interest, and $45K value of stock would reduce loan balance to $5K.
- For 2023 the $15K payoff could be split as $2500 to loan payoff, and $12500K to interest gain.
- For 2024 the $15K payoff could be split as $2500 to loan payoff, and $12500K to interest gain.