If you’re in a higher tax bracket than your spouse, consider lending your spouse money to invest. If you charge your spouse the prescribed rate of interest on the loan, then the attribution rules won’t apply. The prescribed rate is currently just 2 per cent – which you can lock in indefinitely on the loan.
The prescribed rate is based on the average 90-day T-bill rate for the first month of the prior quarter , so we know it will remain at 2 per cent for the second quarter of 2020. And it could be even lower for the third quarter. You could make a spousal loan today, then repay it and advance a new loan at the lower rate.Consider borrowing money from your employer if possible, or from your own corporation. You see, you may be able to borrow at no or low interest.
Tim Cestnick, FCPA, FCA, CPA, CFP, TEP, is an author, and co-founder and CEO of Our Family Office Inc. He can be reached at
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