When to lend money?

This is a question that many people have. When his brother-in-law offered to leave him money to buy a vehicle, even Pepe Average wondered.

The law allows the loan of money between individuals. Its operation is the same as when a bank is involved The debtor agrees to return the money within a certain period.

The creditor can take legal action if he doesn't.

In writing is the first thing you should do. If you want, you can submit it to a public deed or go to a lawyer, but it's not necessary.

The contract must include at least some information.

If there is late-payment interest or how the debt will be claimed in the event of non-payment, it is advisable to indicate this.

The document will serve us for two things.

Loans between individuals are not subject to the Property Transfer Tax. The fact that a transaction is exempt from payment does not mean that self-assessment is not required. If you are going to lend money to individuals, you will need to go to the Treasury office with the loan contract to have it sealed and submit the appropriate ITP and AJD form.

The Treasury is aware of the loan operation and will not have problems.

You should be aware that loans between individuals have different tax treatment than donations.

It is important that one operation is distinct from another so that you don't get punished.

When a parent gives money to their children or a friend without expecting them to return it, it is a donation and subject to Gift Tax. This tax is not a one-size-fits-all tax and must be declared and settled.

The operation would be exempt from taxes if it is a loan between individuals.