Lending to friend to India

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msr999
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Lending to friend to India

Post by msr999 » Mon Sep 09, 2019 11:28 am

Hi,
I am considering lending a large sum (100k) to a friend in India. I will be charging nominal interest and he will be paying back everything in dollars (i.e. he assumes all currency risk). Does any one have any experience doing it? What is the best way to send and receive money? How to make sure everything is documented in case IRS comes asking for details when its paid back? Potential issues to consider? Thanks

sharukh
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Re: Lending to friend to India

Post by sharukh » Mon Sep 09, 2019 11:40 am

I will be more concerned on "return OF money" over "return ON money" i.e. counter party risk is too high.

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willthrill81
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Re: Lending to friend to India

Post by willthrill81 » Mon Sep 09, 2019 11:45 am

sharukh wrote:
Mon Sep 09, 2019 11:40 am
I will be more concerned on "return OF money" over "return ON money" i.e. counter party risk is too high.
I agree.

Further, not much will ruin a friendship as quickly or as thoroughly as a loan.

I wouldn't do it. Let the friend get a loan of his/her own.

If the OP is insistent on moving ahead, I'd insist on there being collateral to secure the loan and have a formal contract in place.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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msr999
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Re: Lending to friend to India

Post by msr999 » Mon Sep 09, 2019 11:57 am

willthrill81 wrote:
Mon Sep 09, 2019 11:45 am
sharukh wrote:
Mon Sep 09, 2019 11:40 am
I will be more concerned on "return OF money" over "return ON money" i.e. counter party risk is too high.
I agree.

Further, not much will ruin a friendship as quickly or as thoroughly as a loan.

I wouldn't do it. Let the friend get a loan of his/her own.

If the OP is insistent on moving ahead, I'd insist on there being collateral to secure the loan and have a formal contract in place.
I too agree. However, for the sake of this thread, let us ignore the risk part so we can continue on how. Thanks

Jack FFR1846
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Re: Lending to friend to India

Post by Jack FFR1846 » Mon Sep 09, 2019 12:24 pm

You're very nice to be giving a gift so large to your friend.
Bogle: Smart Beta is stupid

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Blueskies123
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Re: Lending to friend to India

Post by Blueskies123 » Mon Sep 09, 2019 12:35 pm

You do realize that what you are really doing is GIVING him the money, right!

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Re: Lending to friend to India

Post by rashad3000 » Mon Sep 09, 2019 12:39 pm

Jack FFR1846 wrote:
Mon Sep 09, 2019 12:24 pm
You're very nice to be giving a gift so large to your friend.
Indeed.

cochlearboy
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Re: Lending to friend to India

Post by cochlearboy » Mon Sep 09, 2019 12:41 pm

msr999 wrote:
Mon Sep 09, 2019 11:57 am
willthrill81 wrote:
Mon Sep 09, 2019 11:45 am
sharukh wrote:
Mon Sep 09, 2019 11:40 am
I will be more concerned on "return OF money" over "return ON money" i.e. counter party risk is too high.
I agree.

Further, not much will ruin a friendship as quickly or as thoroughly as a loan.

I wouldn't do it. Let the friend get a loan of his/her own.

If the OP is insistent on moving ahead, I'd insist on there being collateral to secure the loan and have a formal contract in place.
I too agree. However, for the sake of this thread, let us ignore the risk part so we can continue on how. Thanks
I don't think you really comprehend how complicated what you want to do is with respect to the U.S. taxation regulations on foreign investments. Essentially, you're making a 100k investment in India, in which you would be paid back the principle+interest. In addition to U.S. income taxes, you would also have to pay foreign taxes, and you would especially be burdened by IRS reporting requirements regarding this business (i.e., it is possible to avoid paying US taxes by using foreign businesses - for example - look up Paul Manafort).

If you are really being paid back in "nominal" interest, then I suggest making it a gift and writing the balance off your taxes. Otherwise, you would be better off dumping that 100k into VTSAX, etc.

fm3040
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Re: Lending to friend to India

Post by fm3040 » Mon Sep 09, 2019 1:15 pm

You can set up an account with money2india.com and use their services to transfer the money to a bank account in India.

I would loan up to an amount that you can easily write off. Say, you send 10K to your friend and if he/she does not return it, no big deal. I have heard a few stories of good friends/relatives not returning the money not all because they do not want to, but because circumstances are such that they cannot.

EnjoyIt
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Re: Lending to friend to India

Post by EnjoyIt » Mon Sep 09, 2019 1:28 pm

Jack FFR1846 wrote:
Mon Sep 09, 2019 12:24 pm
You're very nice to be giving a gift so large to your friend.
Yup...Once you're fine with never seeing that money again, you will realize that it makes no difference how you organize it. Just have the recipient transfer money to you every month and hope for the best. Keep track of all the transactions. Expect the strong possibility that you will lose this friend.

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DanMahowny
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Re: Lending to friend to India

Post by DanMahowny » Mon Sep 09, 2019 1:33 pm

I have no words . . . .
Funding secured

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Re: Lending to friend to India

Post by JGoneRiding » Mon Sep 09, 2019 1:49 pm

Can I be your friend?

JHU ALmuni
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Re: Lending to friend to India

Post by JHU ALmuni » Mon Sep 09, 2019 1:52 pm

msr999 wrote:
Mon Sep 09, 2019 11:28 am
..... Potential issues to consider?
Speaking of potential issues expect to never see the money again.

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Re: Lending to friend to India

Post by TheOscarGuy » Mon Sep 09, 2019 2:17 pm

msr999 wrote:
Mon Sep 09, 2019 11:28 am
Hi,
I am considering lending a large sum (100k) to a friend in India. I will be charging nominal interest and he will be paying back everything in dollars (i.e. he assumes all currency risk). Does any one have any experience doing it? What is the best way to send and receive money? How to make sure everything is documented in case IRS comes asking for details when its paid back? Potential issues to consider? Thanks
Don't do it!
Its looks like a nightmare in terms of implementation, and taxation.

Bronko
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Re: Lending to friend to India

Post by Bronko » Mon Sep 09, 2019 2:35 pm

You want to consider this little thing called the Patriot Act and the subsequent issues regarding banking and overseas money transfers. I'm not saying it can't be done. Expect headaches and hassles you haven't even dreamed of.
Never let a little bit of money get in the way of a real good time.

ohai
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Re: Lending to friend to India

Post by ohai » Mon Sep 09, 2019 2:47 pm

Ok. So Google obviously tells you to document the loan, as well as any interest payments.

My question is... what happens if you arrange for your friend to "default" and make this effectively a gift? In the US, presumably, the default will be recorded by credit agencies and deter people from using this method to avoid gift taxes. However, I doubt that this recourse exists across borders. So, I imagine there are all kinds of OFAC rules aimed at people who would use schemes like this to launder money or evade taxes.

GoldenFinch
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Re: Lending to friend to India

Post by GoldenFinch » Mon Sep 09, 2019 2:47 pm

When lending money to anyone realize that you are not a bank, but you are taking the same risk as a bank does when it loans money. The risk is that you will not be paid back. Make sure you can afford to lose 100k before you lend it out. Realize that if the friend can’t get a loan from a traditional bank that there may be a good reason.

cochlearboy
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Re: Lending to friend to India

Post by cochlearboy » Mon Sep 09, 2019 2:49 pm

Bronko wrote:
Mon Sep 09, 2019 2:35 pm
You want to consider this little thing called the Patriot Act and the subsequent issues regarding banking and overseas money transfers. I'm not saying it can't be done. Expect headaches and hassles you haven't even dreamed of.
Well, I doubt that the poster will be suspected of supporting you-know-what, which would most certainly happen if this money were heading towards Afghanistan/Pakistan/Iran/Syria. There are a lot of american businesses that do business in India and vice versa, so the poster should be safe from G-men stopping by their home with lots of questions...

renue74
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Re: Lending to friend to India

Post by renue74 » Mon Sep 09, 2019 2:51 pm

What happens if he stops paying?

I would imagine the collection process would be horrific in international lending when you are an individual.

I did a seller finance note to sell my old office condo to a chiropractor. She paid great for 3 years and then got $25K behind. It was a a long process to get my note settled.....and this office was 15 minute drive from me.

halfnine
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Re: Lending to friend to India

Post by halfnine » Mon Sep 09, 2019 2:55 pm

cochlearboy wrote:
Mon Sep 09, 2019 2:49 pm
Bronko wrote:
Mon Sep 09, 2019 2:35 pm
You want to consider this little thing called the Patriot Act and the subsequent issues regarding banking and overseas money transfers. I'm not saying it can't be done. Expect headaches and hassles you haven't even dreamed of.
Well, I doubt that the poster will be suspected of supporting you-know-what, which would most certainly happen if this money were heading towards Afghanistan/Pakistan/Iran/Syria. There are a lot of american businesses that do business in India and vice versa, so the poster should be safe from G-men stopping by their home with lots of questions...
You never know. I recently tried to wire money to myself abroad and was flagged and rejected

Elysium
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Re: Lending to friend to India

Post by Elysium » Mon Sep 09, 2019 3:00 pm

Essentially this is a money laundering scheme, I know the other posters are too nice to call it out that way and as usual trying to be helpful. There are potentially so many irregularities that the IRS would find problematic, especially since OP and his "friend" could just arrange to write the money off and claim deductions as another poster indicated. Tax evasion and money laundering are serious crimes and people get in trouble for foreign transactions all the time. I would request the mods to lock this thread up.

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Re: Lending to friend to India

Post by Bronko » Mon Sep 09, 2019 3:06 pm

cochlearboy wrote:
Mon Sep 09, 2019 2:49 pm
Bronko wrote:
Mon Sep 09, 2019 2:35 pm
You want to consider this little thing called the Patriot Act and the subsequent issues regarding banking and overseas money transfers. I'm not saying it can't be done. Expect headaches and hassles you haven't even dreamed of.
Well, I doubt that the poster will be suspected of supporting you-know-what, which would most certainly happen if this money were heading towards Afghanistan/Pakistan/Iran/Syria. There are a lot of american businesses that do business in India and vice versa, so the poster should be safe from G-men stopping by their home with lots of questions...
You may doubt it. I would bet a paycheck that he will hit speed bumps at a minimum, probably more. Without going off into areas not needed to be covered on a forum let's just say this will be investigated, tracked, flagged, and monitored. Is it legit, sure maybe. Do other American businesses have financial transactions overseas, of course.

Anyway do what you will and best of luck.
Never let a little bit of money get in the way of a real good time.

EnjoyIt
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Re: Lending to friend to India

Post by EnjoyIt » Mon Sep 09, 2019 3:07 pm

Bronko wrote:
Mon Sep 09, 2019 3:06 pm
cochlearboy wrote:
Mon Sep 09, 2019 2:49 pm
Bronko wrote:
Mon Sep 09, 2019 2:35 pm
You want to consider this little thing called the Patriot Act and the subsequent issues regarding banking and overseas money transfers. I'm not saying it can't be done. Expect headaches and hassles you haven't even dreamed of.
Well, I doubt that the poster will be suspected of supporting you-know-what, which would most certainly happen if this money were heading towards Afghanistan/Pakistan/Iran/Syria. There are a lot of american businesses that do business in India and vice versa, so the poster should be safe from G-men stopping by their home with lots of questions...
You may doubt it. I would bet a paycheck that he will hit speed bumps at a minimum, probably more. Without going off into areas not needed to be covered on a forum let's just say this will be investigated, tracked, flagged, and monitored. Is it legit, sure maybe. Do other American businesses have financial transactions overseas, of course.

Anyway do what you will and best of luck.
Wow, I just found a potential use for cryptocurrency.

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whodidntante
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Re: Lending to friend to India

Post by whodidntante » Mon Sep 09, 2019 3:29 pm

I doubt that the IRS will need documentation for the money you sent to India and lost. :twisted:

retiredflyboy
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Re: Lending to friend to India

Post by retiredflyboy » Mon Sep 09, 2019 4:43 pm

Don’t do it!
Facts are stubborn things. Everything works until it doesn’t.

Topic Author
msr999
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Re: Lending to friend to India

Post by msr999 » Mon Sep 09, 2019 4:51 pm

Elysium wrote:
Mon Sep 09, 2019 3:00 pm
Essentially this is a money laundering scheme, I know the other posters are too nice to call it out that way and as usual trying to be helpful. There are potentially so many irregularities that the IRS would find problematic, especially since OP and his "friend" could just arrange to write the money off and claim deductions as another poster indicated. Tax evasion and money laundering are serious crimes and people get in trouble for foreign transactions all the time. I would request the mods to lock this thread up.
Wow. I am salaried employee and have no business so I don't think I can write it off even if I want to. I could call this a gift but was (incorrectly it seems) concerned that I will be asked to pay taxes when my friend pays back as his return could be considered a gift to me (if he pays back lol).
Last edited by msr999 on Mon Sep 09, 2019 5:12 pm, edited 1 time in total.

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msr999
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Re: Lending to friend to India

Post by msr999 » Mon Sep 09, 2019 4:57 pm

Bronko wrote:
Mon Sep 09, 2019 3:06 pm
cochlearboy wrote:
Mon Sep 09, 2019 2:49 pm
Bronko wrote:
Mon Sep 09, 2019 2:35 pm
You want to consider this little thing called the Patriot Act and the subsequent issues regarding banking and overseas money transfers. I'm not saying it can't be done. Expect headaches and hassles you haven't even dreamed of.
Well, I doubt that the poster will be suspected of supporting you-know-what, which would most certainly happen if this money were heading towards Afghanistan/Pakistan/Iran/Syria. There are a lot of american businesses that do business in India and vice versa, so the poster should be safe from G-men stopping by their home with lots of questions...
You may doubt it. I would bet a paycheck that he will hit speed bumps at a minimum, probably more. Without going off into areas not needed to be covered on a forum let's just say this will be investigated, tracked, flagged, and monitored. Is it legit, sure maybe. Do other American businesses have financial transactions overseas, of course.

Anyway do what you will and best of luck.
Thank you. I know it may be foolish on my part (and I may not do it. This thread is just to explore what it takes to do it). Looks like it is relatively uncharted territory for individuals and too many hassles/risks.

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msr999
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Re: Lending to friend to India

Post by msr999 » Mon Sep 09, 2019 5:00 pm

renue74 wrote:
Mon Sep 09, 2019 2:51 pm
What happens if he stops paying?

I would imagine the collection process would be horrific in international lending when you are an individual.

I did a seller finance note to sell my old office condo to a chiropractor. She paid great for 3 years and then got $25K behind. It was a a long process to get my note settled.....and this office was 15 minute drive from me.
I am fully aware there is little I could do if he stops paying. I wanted to get an idea on legal issues and it looks like there are lot of those hurdles as well

Katietsu
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Re: Lending to friend to India

Post by Katietsu » Mon Sep 09, 2019 5:05 pm

I do not think it is uncharted. It is just that I think the relationship is more often family. Hopefully, someone with actual experience will give you advice.

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Re: Lending to friend to India

Post by willthrill81 » Mon Sep 09, 2019 5:08 pm

Katietsu wrote:
Mon Sep 09, 2019 5:05 pm
I do not think it is uncharted. It is just that I think the relationship is more often family. Hopefully, someone with actual experience will give you advice.
That's just it. Several here probably do have experience loaning money to friends, and that's why the OP is being so strongly discouraged from doing it.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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msr999
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Re: Lending to friend to India

Post by msr999 » Mon Sep 09, 2019 5:09 pm

cochlearboy wrote:
Mon Sep 09, 2019 12:41 pm
msr999 wrote:
Mon Sep 09, 2019 11:57 am
willthrill81 wrote:
Mon Sep 09, 2019 11:45 am
sharukh wrote:
Mon Sep 09, 2019 11:40 am
I will be more concerned on "return OF money" over "return ON money" i.e. counter party risk is too high.
I agree.

Further, not much will ruin a friendship as quickly or as thoroughly as a loan.

I wouldn't do it. Let the friend get a loan of his/her own.

If the OP is insistent on moving ahead, I'd insist on there being collateral to secure the loan and have a formal contract in place.
I too agree. However, for the sake of this thread, let us ignore the risk part so we can continue on how. Thanks
I don't think you really comprehend how complicated what you want to do is with respect to the U.S. taxation regulations on foreign investments. Essentially, you're making a 100k investment in India, in which you would be paid back the principle+interest. In addition to U.S. income taxes, you would also have to pay foreign taxes, and you would especially be burdened by IRS reporting requirements regarding this business (i.e., it is possible to avoid paying US taxes by using foreign businesses - for example - look up Paul Manafort).

If you are really being paid back in "nominal" interest, then I suggest making it a gift and writing the balance off your taxes. Otherwise, you would be better off dumping that 100k into VTSAX, etc.
My initial thought was to write this as a gift both ways but thought when my friend pays me back I may have to pay taxes. Looks like recipients don't pay gift taxes. So giving him as a gift and then receiving it as gift is best approach and I don't have to disclose/worry about IRS if I do that?

FireProof
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Re: Lending to friend to India

Post by FireProof » Mon Sep 09, 2019 5:14 pm

There IS a gift tax in India, so it doesn't seem like a good option.

Katietsu
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Re: Lending to friend to India

Post by Katietsu » Mon Sep 09, 2019 5:20 pm

And the IRS does not look favorably on matching gifts. They look like someone trying to avoid calling it a loan and reporting interest.

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msr999
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Re: Lending to friend to India

Post by msr999 » Mon Sep 09, 2019 5:28 pm

willthrill81 wrote:
Mon Sep 09, 2019 5:08 pm
Katietsu wrote:
Mon Sep 09, 2019 5:05 pm
I do not think it is uncharted. It is just that I think the relationship is more often family. Hopefully, someone with actual experience will give you advice.
That's just it. Several here probably do have experience loaning money to friends, and that's why the OP is being so strongly discouraged from doing it.
I appreciate the advice. I really do. I do know all the risks associated and haven't made any decision on it yet. I am just trying to understand the legal risks and hence this thread. Thanks

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msr999
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Re: Lending to friend to India

Post by msr999 » Mon Sep 09, 2019 5:30 pm

Katietsu wrote:
Mon Sep 09, 2019 5:20 pm
And the IRS does not look favorably on matching gifts. They look like someone trying to avoid calling it a loan and reporting interest.
Based on FireProof's comment about gift tax in India and this information, I guess I am back to lending the money at some nominal interest rate and reporting the interest.

rupalb9
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Re: Lending to friend to India

Post by rupalb9 » Mon Sep 09, 2019 5:33 pm

Use TransferWise.
Transparent.
Low-cost.
Quick.

[I was put in a position to lend $20K to a relative in India. The agreed term was 5 years at zero interest. There are 3 years left on the term.
I do not expect to get the full amount back.]

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Re: Lending to friend to India

Post by LadyGeek » Mon Sep 09, 2019 7:00 pm

I want to address several comments related to gifting. For the record, discussions of dishonest behavior or bypassing the law are totally unacceptable. The intent is to understand how to do this within the existing legal framework; in which case this discussion can continue.

To expand on the previous comments, the IRS defines a gift:
You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.
Also: Frequently Asked Questions on Gift Taxes | Internal Revenue Service
Who pays the gift tax?

The donor is generally responsible for paying the gift tax....

What can be excluded from gifts?

The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.

1. Gifts that are not more than the annual exclusion for the calendar year....

How many annual exclusions are available?

...For 2018 and 2019, the annual exclusion is $15,000.
In summary:

- expecting repayment of a 100k loan is not a gift.
- You should charge an interest rate that is at the current market rate.
- If nothing is expected in return for the 100k, then a gift tax return must be filed.
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Re: Lending to friend to India

Post by LadyGeek » Mon Sep 09, 2019 7:03 pm

msr999 wrote:
Mon Sep 09, 2019 5:30 pm
Katietsu wrote:
Mon Sep 09, 2019 5:20 pm
And the IRS does not look favorably on matching gifts. They look like someone trying to avoid calling it a loan and reporting interest.
Based on FireProof's comment about gift tax in India and this information, I guess I am back to lending the money at some nominal interest rate and reporting the interest.
Yes, that is the right approach.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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galawdawg
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Re: Lending to friend to India

Post by galawdawg » Mon Sep 09, 2019 7:45 pm

msr999 wrote:
Mon Sep 09, 2019 5:28 pm
I appreciate the advice. I really do. I do know all the risks associated and haven't made any decision on it yet. I am just trying to understand the legal risks and hence this thread. Thanks
Well then, it sounds like you really don't know all of the risks associated...

If you decide to disregard those who caution you not to do it, I'd recommend you consult with an accountant or attorney who has handled foreign lending and who is knowledgeable about the laws, regulations and reporting requirements that might apply. If you can afford to send your friend $100k, you can afford to pay a professional for correct guidance concerning the legal and tax implications rather than relying upon the collective wisdom of your friends here.

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SlowMovingInvestor
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Re: Lending to friend to India

Post by SlowMovingInvestor » Tue Sep 10, 2019 5:04 pm

If you register the loan as a contract in India, presumably you could enforce the contract in case of non-repayment ?

A US contract might not work since a US court might only be able to enforce a judgement on US assets.

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Re: Lending to friend to India

Post by GMCZ71 » Wed Sep 11, 2019 7:14 am

I didn't see what the loan was going to be used for in India? Is it possible that by accident those funds can be tied to drugs or terrorism and you as the lender could be implicated.
John

aum
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Re: Lending to friend to India

Post by aum » Wed Sep 11, 2019 5:35 pm

OP: As many have mentioned here - Dont do it and they are 100% right.

I too am from India and have been living in US for past 35 years. Here is my story....

Year 1998: My childhood friend from India rings me and tells me he urgently needs 100K. I had just closed on my new house and I had no cash. He told me not to worry....just apply for loan as interest rates(8% at that time) in US is low enough and he'll take care of the interest too. I smelled something fishy so I asked my other friend for more details...Apparently he was borrowing money at 2% per month and lending to others at 3%. His borrowers did not pay him and his lenders were after him. I then did not land him any money

Year 2007: He kept approaching for money from 1998 - 2007 from time to time and I kept avoiding it. Then in 2007 I visited my old place. Him, his wife, his mother and his handicapped daughter kept forcing me to visit his home. I visited and they trapped me. His mother and his wife were crying, telling me that they have no money to eat twice a day, no money to take his sick son to doctor and pleaded me to help them. Asked me to lend them rupees worth of 8K USD so they can start a small business and get back on their feet. I fell for it and landed money to them with the condition that they would pay me back same amount in Rupees in three years and I will not charge any interest and will bear exchange rate risk. I came back to US and I received a call from him telling me he just bought a new cell phone and I should note down his new number...wait, money was lent to start a new business and new cell phone was not needed. He just ignored my comment and hung up on me.

I waited for three years and asked him to pay back. He said next month....this trend continued month after month. I was back in India in 2012 and personally visited and asked them to pay my money back. I told them even you pay me the same amount I landed in rupees, with exchange rate down, my loan of US 8K now will be worth only 6K. But no worries, just pay me back the same amount I loaned. This time their tone was different. His mother threatened me to not ask for money. She said If I keep asking him to pay money back, he may commit suicide and I'll be responsible for it. I was stunned and couldn't believe that these are the same people whom I helped in their worst time. His wife and his daughter were present when she threatened me and they all had a smirk on their faces...I felt sick to my stomach, shook my head in disbelief and left.

I go to India every year and I visit my old place. Can you believe this shameless fellow still comes to see me even though I do not want to ever see his face and still expects me to lend him money and help him?

I learned the lesson hard way: Once you lend somebody money, he will make you a beggar!
Last edited by aum on Wed Sep 11, 2019 8:15 pm, edited 1 time in total.

Dottie57
Posts: 6701
Joined: Thu May 19, 2016 5:43 pm

Re: Lending to friend to India

Post by Dottie57 » Wed Sep 11, 2019 6:10 pm

aum wrote:
Wed Sep 11, 2019 5:35 pm
OP: As many have mentioned here - Dont do it and they are 100% right.

I too am from India and have been living in US for past 35 years. Here is my story....

Year 2007: He kept approaching for money from 1998 - 2007 from time to time and I kept avoiding it. Then in 2007 I visited my old place. Him, his wife, his mother and his handicapped daughter kept forcing me to visit his home. I visited and they trapped me. His mother and his wife were crying, telling me that they have no money to eat twice a day, no money to take his sick son to doctor and pleaded me to help them. Asked me to land them rupees worth of 8K USD so they can start a small business and get back on their feet. I fell for it and landed money to them with the condition that they would pay me back same amount in Rupees in three years and I will not charge any interest and will bear exchange rate risk. I came back to US and I received a call from him telling me he just bought a new cell phone and I should note down his new number...wait, money was lent to start a new business and new cell phone was not needed. He just ignored my comment and hung up on me.

I learned the lesson hard way: Once you lend somebody money, he will make you a beggar!
I very much hope you have learned to say “no” in a very firm tone. Also you can say “I am not a bank!” Which is very true. A friend who asks for money is not a friend.

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Hector
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Re: Lending to friend to India

Post by Hector » Wed Sep 11, 2019 6:25 pm

aum wrote:
Wed Sep 11, 2019 5:35 pm
OP: As many have mentioned here - Dont do it and they are 100% right.

I too am from India and have been living in US for past 35 years. Here is my story....

Year 1998: My childhood friend from India rings me and tells me he urgently needs 100K. I had just closed on my new house and I had no cash. He told me not to worry....just apply for loan as interest rates(8% at that time) in US is low enough and he'll take care of the interest too. I smelled something fishy so I asked my other friend for more details...Apparently he was borrowing money at 2% per month and lending to others at 3%. His borrowers did not pay him and his lenders were after him. I then did not land him any money

Year 2007: He kept approaching for money from 1998 - 2007 from time to time and I kept avoiding it. Then in 2007 I visited my old place. Him, his wife, his mother and his handicapped daughter kept forcing me to visit his home. I visited and they trapped me. His mother and his wife were crying, telling me that they have no money to eat twice a day, no money to take his sick son to doctor and pleaded me to help them. Asked me to land them rupees worth of 8K USD so they can start a small business and get back on their feet. I fell for it and landed money to them with the condition that they would pay me back same amount in Rupees in three years and I will not charge any interest and will bear exchange rate risk. I came back to US and I received a call from him telling me he just bought a new cell phone and I should note down his new number...wait, money was lent to start a new business and new cell phone was not needed. He just ignored my comment and hung up on me.

I waited for three years and asked him to pay back. He said next month....this trend continued month after month. I was back in India in 2012 and personally visited and asked them to pay my money back. I told them even you pay me the same amount I landed in rupees, with exchange rate down, my loan of US 8K now will be worth only 6K. But no worries, just pay me back the same amount I loaned. This time their tone was different. His mother threatened me to not ask for money. She said If I keep asking him to pay money back, he may commit suicide and I'll be responsible for it. I was stunned and couldn't believe that these are the same people whom I helped in their worst time. His wife and his daughter were present when she threatened me and they all had a smirk on their faces...I felt sick to my stomach, shook my head in disbelief and left.

I go to India every year and I visit my old place. Can you believe this shameless fellow still comes to see me even though I do not want to ever see his face and still expects me to lend him money and help him?

I learned the lesson hard way: Once you lend somebody money, he will make you a beggar!
I am sorry to hear that. Is it too difficult to ask him not to come see you when you go to India?

steadyhand
Posts: 74
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Re: Lending to friend to India

Post by steadyhand » Wed Sep 11, 2019 7:16 pm

Often times the thread starts saying a friend but it could be a family member or themselves. With the latter I mean moving the money to use in a different country and then moving it back later. So it is better to focus on potential hassles than risk as the poster has mentioned.

GoldenFinch
Posts: 1906
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Re: Lending to friend to India

Post by GoldenFinch » Wed Sep 11, 2019 7:46 pm

aum wrote:
Wed Sep 11, 2019 5:35 pm
OP: As many have mentioned here - Dont do it and they are 100% right.

I too am from India and have been living in US for past 35 years. Here is my story....

Year 1998: My childhood friend from India rings me and tells me he urgently needs 100K. I had just closed on my new house and I had no cash. He told me not to worry....just apply for loan as interest rates(8% at that time) in US is low enough and he'll take care of the interest too. I smelled something fishy so I asked my other friend for more details...Apparently he was borrowing money at 2% per month and lending to others at 3%. His borrowers did not pay him and his lenders were after him. I then did not land him any money

Year 2007: He kept approaching for money from 1998 - 2007 from time to time and I kept avoiding it. Then in 2007 I visited my old place. Him, his wife, his mother and his handicapped daughter kept forcing me to visit his home. I visited and they trapped me. His mother and his wife were crying, telling me that they have no money to eat twice a day, no money to take his sick son to doctor and pleaded me to help them. Asked me to land them rupees worth of 8K USD so they can start a small business and get back on their feet. I fell for it and landed money to them with the condition that they would pay me back same amount in Rupees in three years and I will not charge any interest and will bear exchange rate risk. I came back to US and I received a call from him telling me he just bought a new cell phone and I should note down his new number...wait, money was lent to start a new business and new cell phone was not needed. He just ignored my comment and hung up on me.

I waited for three years and asked him to pay back. He said next month....this trend continued month after month. I was back in India in 2012 and personally visited and asked them to pay my money back. I told them even you pay me the same amount I landed in rupees, with exchange rate down, my loan of US 8K now will be worth only 6K. But no worries, just pay me back the same amount I loaned. This time their tone was different. His mother threatened me to not ask for money. She said If I keep asking him to pay money back, he may commit suicide and I'll be responsible for it. I was stunned and couldn't believe that these are the same people whom I helped in their worst time. His wife and his daughter were present when she threatened me and they all had a smirk on their faces...I felt sick to my stomach, shook my head in disbelief and left.

I go to India every year and I visit my old place. Can you believe this shameless fellow still comes to see me even though I do not want to ever see his face and still expects me to lend him money and help him?

I learned the lesson hard way: Once you lend somebody money, he will make you a beggar!
Another lesson illustrated here involving the risks of lending money is that aside from possibly not getting your principal back it can ruin relationships.

student
Posts: 3704
Joined: Fri Apr 03, 2015 6:58 am

Re: Lending to friend to India

Post by student » Wed Sep 11, 2019 7:53 pm

Hector wrote:
Wed Sep 11, 2019 6:25 pm
aum wrote:
Wed Sep 11, 2019 5:35 pm
OP: As many have mentioned here - Dont do it and they are 100% right.

I too am from India and have been living in US for past 35 years. Here is my story....

Year 1998: My childhood friend from India rings me and tells me he urgently needs 100K. I had just closed on my new house and I had no cash. He told me not to worry....just apply for loan as interest rates(8% at that time) in US is low enough and he'll take care of the interest too. I smelled something fishy so I asked my other friend for more details...Apparently he was borrowing money at 2% per month and lending to others at 3%. His borrowers did not pay him and his lenders were after him. I then did not land him any money

Year 2007: He kept approaching for money from 1998 - 2007 from time to time and I kept avoiding it. Then in 2007 I visited my old place. Him, his wife, his mother and his handicapped daughter kept forcing me to visit his home. I visited and they trapped me. His mother and his wife were crying, telling me that they have no money to eat twice a day, no money to take his sick son to doctor and pleaded me to help them. Asked me to land them rupees worth of 8K USD so they can start a small business and get back on their feet. I fell for it and landed money to them with the condition that they would pay me back same amount in Rupees in three years and I will not charge any interest and will bear exchange rate risk. I came back to US and I received a call from him telling me he just bought a new cell phone and I should note down his new number...wait, money was lent to start a new business and new cell phone was not needed. He just ignored my comment and hung up on me.

I waited for three years and asked him to pay back. He said next month....this trend continued month after month. I was back in India in 2012 and personally visited and asked them to pay my money back. I told them even you pay me the same amount I landed in rupees, with exchange rate down, my loan of US 8K now will be worth only 6K. But no worries, just pay me back the same amount I loaned. This time their tone was different. His mother threatened me to not ask for money. She said If I keep asking him to pay money back, he may commit suicide and I'll be responsible for it. I was stunned and couldn't believe that these are the same people whom I helped in their worst time. His wife and his daughter were present when she threatened me and they all had a smirk on their faces...I felt sick to my stomach, shook my head in disbelief and left.

I go to India every year and I visit my old place. Can you believe this shameless fellow still comes to see me even though I do not want to ever see his face and still expects me to lend him money and help him?

I learned the lesson hard way: Once you lend somebody money, he will make you a beggar!
I am sorry to hear that. Is it too difficult to ask him not to come see you when you go to India?
+1. The audacity of some people. Maybe you need to ask him to pay you back whenever you see him.

aude
Posts: 254
Joined: Sat Feb 11, 2012 11:06 pm

Re: Lending to friend to India

Post by aude » Wed Sep 11, 2019 7:59 pm

Assuming that this is not some kind of tax avoidance scheme, but rather a legitimate arrangement, considering the amount involved, why not hire a reputable Indian lawyer to help you? He or she will probably tell you the collecting a judgment in India from abroad will be difficult. At least you’ll know what you’re getting into!

aum
Posts: 49
Joined: Wed Jan 30, 2013 2:27 pm

Re: Lending to friend to India

Post by aum » Wed Sep 11, 2019 8:08 pm

Hector wrote:
Wed Sep 11, 2019 6:25 pm
aum wrote:
Wed Sep 11, 2019 5:35 pm
OP: As many have mentioned here - Dont do it and they are 100% right.

I too am from India and have been living in US for past 35 years. Here is my story....

Year 1998: My childhood friend from India rings me and tells me he urgently needs 100K. I had just closed on my new house and I had no cash. He told me not to worry....just apply for loan as interest rates(8% at that time) in US is low enough and he'll take care of the interest too. I smelled something fishy so I asked my other friend for more details...Apparently he was borrowing money at 2% per month and lending to others at 3%. His borrowers did not pay him and his lenders were after him. I then did not land him any money

Year 2007: He kept approaching for money from 1998 - 2007 from time to time and I kept avoiding it. Then in 2007 I visited my old place. Him, his wife, his mother and his handicapped daughter kept forcing me to visit his home. I visited and they trapped me. His mother and his wife were crying, telling me that they have no money to eat twice a day, no money to take his sick son to doctor and pleaded me to help them. Asked me to land them rupees worth of 8K USD so they can start a small business and get back on their feet. I fell for it and landed money to them with the condition that they would pay me back same amount in Rupees in three years and I will not charge any interest and will bear exchange rate risk. I came back to US and I received a call from him telling me he just bought a new cell phone and I should note down his new number...wait, money was lent to start a new business and new cell phone was not needed. He just ignored my comment and hung up on me.

I waited for three years and asked him to pay back. He said next month....this trend continued month after month. I was back in India in 2012 and personally visited and asked them to pay my money back. I told them even you pay me the same amount I landed in rupees, with exchange rate down, my loan of US 8K now will be worth only 6K. But no worries, just pay me back the same amount I loaned. This time their tone was different. His mother threatened me to not ask for money. She said If I keep asking him to pay money back, he may commit suicide and I'll be responsible for it. I was stunned and couldn't believe that these are the same people whom I helped in their worst time. His wife and his daughter were present when she threatened me and they all had a smirk on their faces...I felt sick to my stomach, shook my head in disbelief and left.

I go to India every year and I visit my old place. Can you believe this shameless fellow still comes to see me even though I do not want to ever see his face and still expects me to lend him money and help him?

I learned the lesson hard way: Once you lend somebody money, he will make you a beggar!
I am sorry to hear that. Is it too difficult to ask him not to come see you when you go to India?
I have told him several times not to ever come see me but this guy is shameless. My blood boils when I see this guy and his family. Never talks about giving me any money back and asks for more... He only lives two houses from my old home so as soon as I visit everyone in the area knows and come to see me.

student
Posts: 3704
Joined: Fri Apr 03, 2015 6:58 am

Re: Lending to friend to India

Post by student » Wed Sep 11, 2019 8:20 pm

aum wrote:
Wed Sep 11, 2019 8:08 pm
Hector wrote:
Wed Sep 11, 2019 6:25 pm
aum wrote:
Wed Sep 11, 2019 5:35 pm
OP: As many have mentioned here - Dont do it and they are 100% right.

I too am from India and have been living in US for past 35 years. Here is my story....

Year 1998: My childhood friend from India rings me and tells me he urgently needs 100K. I had just closed on my new house and I had no cash. He told me not to worry....just apply for loan as interest rates(8% at that time) in US is low enough and he'll take care of the interest too. I smelled something fishy so I asked my other friend for more details...Apparently he was borrowing money at 2% per month and lending to others at 3%. His borrowers did not pay him and his lenders were after him. I then did not land him any money

Year 2007: He kept approaching for money from 1998 - 2007 from time to time and I kept avoiding it. Then in 2007 I visited my old place. Him, his wife, his mother and his handicapped daughter kept forcing me to visit his home. I visited and they trapped me. His mother and his wife were crying, telling me that they have no money to eat twice a day, no money to take his sick son to doctor and pleaded me to help them. Asked me to land them rupees worth of 8K USD so they can start a small business and get back on their feet. I fell for it and landed money to them with the condition that they would pay me back same amount in Rupees in three years and I will not charge any interest and will bear exchange rate risk. I came back to US and I received a call from him telling me he just bought a new cell phone and I should note down his new number...wait, money was lent to start a new business and new cell phone was not needed. He just ignored my comment and hung up on me.

I waited for three years and asked him to pay back. He said next month....this trend continued month after month. I was back in India in 2012 and personally visited and asked them to pay my money back. I told them even you pay me the same amount I landed in rupees, with exchange rate down, my loan of US 8K now will be worth only 6K. But no worries, just pay me back the same amount I loaned. This time their tone was different. His mother threatened me to not ask for money. She said If I keep asking him to pay money back, he may commit suicide and I'll be responsible for it. I was stunned and couldn't believe that these are the same people whom I helped in their worst time. His wife and his daughter were present when she threatened me and they all had a smirk on their faces...I felt sick to my stomach, shook my head in disbelief and left.

I go to India every year and I visit my old place. Can you believe this shameless fellow still comes to see me even though I do not want to ever see his face and still expects me to lend him money and help him?

I learned the lesson hard way: Once you lend somebody money, he will make you a beggar!
I am sorry to hear that. Is it too difficult to ask him not to come see you when you go to India?
I have told him several times not to ever come see me but this guy is shameless. My blood boils when I see this guy and his family. Never talks about giving me any money back and asks for more... He only lives two houses from my old home so as soon as I visit everyone in the area knows and come to see me.
Maybe a preemptive strike. Email him saying that you are coming and are looking forward to seeing him because you expect a payment.

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