Write off bad loan against income tax?

A

arbitron

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If you give an unsecured personal loan of €20k and agree an interest rate with total repayments owed €22k and they end up in a PIA can you claim anything against your income tax? Total return from PIA over the 5 years is less than €1k so not even interest recouped.
 
Don't see how this would be allowed. It's hardly even worth your while getting the 1K back !
 
I'm on excellent terms with the debtor & only agreed to be involved in PIA so I'd have voting rights to ensure they get the PIA. I don't know much about tax but we thought since businesses are allowed tax relief on some losses etc I might get something for a bad debt.
 
You will be unable to write off the capital element of the loan against your income.

Under the Act, "Relatives" are not allowed to vote in favour of a PIA or DSA.

Jim Stafford
 
arbitron said:
Yes, does that help?
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Just was wondering, but I'd expect my relative to pay me back at some point in the future if I'd personally put myself out of pocket to help them out. Just saying. Especially if they get back on their feet. I don't feel the same way about someone in relation to an institution where they are genuinely broke - as that is the way business works. Just I'd not be able to live with myself if I didn't pay back my debts.
 
arbitron said:
If you give an unsecured personal loan of €20k and agree an interest rate with total repayments owed €22k and they end up in a PIA can you claim anything against your income tax? Total return from PIA over the 5 years is less than €1k so not even interest recouped.
Click to expand...

A simple loan like this is not a chargeable assets therefore a loss incurred is not a loss for Capital Gains Tax Purposes.

If you were in the business of giving out loans then a loss on a loan would be a deductable expenses of your business.
 
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