# Loan from family member in the US to me in the UK: any gotchas?



## LondonResident (Sep 27, 2013)

Hello. I am a US citizen resident in the UK and I would like to borrow money from a family member in the US.

Is there anything I need to watch out for in terms of taxes and/or reporting?

Is it better to deposit the loan into my US bank account and then I will transfer it over or directly into a UK account? Or does this not matter?

He is charging interest above the mid term AFR so there are no issues with gifting.

Thanks!


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## Bevdeforges (Nov 16, 2007)

Don't know about the UK side of the tax situation, but as far as the US side goes, you probably want to determine if your family member is going to declare the interest as income. It normally only matters if the loan is related to a home purchase or mortgage, as they've pretty well done away with interest deductions with the recent increase in the standard deduction. 

Just be sure that you're in synch on how you'll be handling the loan for US tax purposes. But past that, it probably doesn't need to be reported on either side.

Where you take "delivery" of the loan really doesn't matter except as far as transfer fees and exchange rates.


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## Dunedin (Aug 12, 2013)

One party will need to bear the exchange rate risk on the loan. You should be clear as to who is taking this risk.

You will have an obligation to deduct basic rate tax from the interest, and remit this to HMRC. See https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim9200

The US lender should reclaim this tax from HMRC under the UK US double tax treaty.


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