If your parents loan you money...
Instead of having a mortgage, let's say I borrow from my parents... so they simply give me the money on a handshake to pay back the loan.
Now, I'm just giving you a hypothetical...let's not get bent out of shape.
So I promise to pay the loan back to them at, say, 5.5% yearly.
1. Is this legal?
2. Would my parents have to report the 5.5% interest as income? (could they keep the full 5.5%?)
3. Is there a system in place that could detect such a "deal". (-a-there is a sudden 100,000 drop in my parent's bank account. -b- the parents are depositing 2,000 monthly back into their account)
I've got no idea. Any answers?