Large family loan

[lesmaverick]

Hello

If my brother loans us $200k and we pay him back $200k after we sell our house in 3 years plus the percentage increase in equity ?

[KeshaH]

We'd love to help. Can you provide a little more context so that we can better assist you?

[lesmaverick]

If I borrow $200k from a relative and promise to pay back in 3 years when we sell our house.  Are there any taxes involved and do I need a loan agreement or promissory note? 

[KrisD15]

Unless it's a written lean on the property, which it doesn't sound like it is, you won't be able to claim any of the "percentage of increase" as mortgage interest. 

Your brother will need to claim the excess over 200,000 that you pay him as income, but you won't be able to deducted it unless you write up some sort of agreement where you are selling him a percentage of the property. 

If you're eligible to use the exclusion from capital gain on the sale of your home, you might not pay any tax on the increase in value.