No. It’s not an expense, just moving cash asset to physical asset
Ok_Shake_368 on
No, you can only write off the interest.
You use the loan principal for something (expenses, purchasing assets, ect).
You can write off those expenses or depreciate those assets. But just acquiring a loan does not grant you the ability to write it off
falling_sity on
No, because you’re paying off cash that is not earned income.
Think about it this way- -if it can be taxed on the way in, it is often deductible on the way out. Since loans aren’t taxable income, repaying the principal is an expense drawing on money that wasn’t taxed in the first place.
If it was deductible, all a business would have to do is draw loans that were equal to or greater than their taxable income, pay them off immediately, and reduce their tax liability to zero.
BasisofOpinion on
Principal portion of a loan is a liability. Paying off the loan principal is just reducing the liability. It is not an expense.
The interest portion is an expense, and is tax deductible.
876050 on
NO
j4schum1 on
It sounds like your brother found that one tax loophole the IRS doesn’t want you to know about
6gunsammy on
You write off what you buy with the loan not the loan repayment. So if you use your credit card to buy a widget for your business. you can deduct the widget, but you cannot deduct the credit card repayment.
11 Comments
No because the loan isn’t income.
No. It’s not an expense, just moving cash asset to physical asset
No, you can only write off the interest.
You use the loan principal for something (expenses, purchasing assets, ect).
You can write off those expenses or depreciate those assets. But just acquiring a loan does not grant you the ability to write it off
No, because you’re paying off cash that is not earned income.
Think about it this way- -if it can be taxed on the way in, it is often deductible on the way out. Since loans aren’t taxable income, repaying the principal is an expense drawing on money that wasn’t taxed in the first place.
If it was deductible, all a business would have to do is draw loans that were equal to or greater than their taxable income, pay them off immediately, and reduce their tax liability to zero.
Principal portion of a loan is a liability. Paying off the loan principal is just reducing the liability. It is not an expense.
The interest portion is an expense, and is tax deductible.
NO
It sounds like your brother found that one tax loophole the IRS doesn’t want you to know about
You write off what you buy with the loan not the loan repayment. So if you use your credit card to buy a widget for your business. you can deduct the widget, but you cannot deduct the credit card repayment.
No. Only the interest.
always listen to your borther.
Write off the interest. Depreciate the asset.