From Blue Hawaii ...

Hi TaxMama, my favorite MaMa, 

Is there still imputed interest on a loan from my parents that
borrowed money from their home equity account, even though my repayment includes the principal and interest of the loan they made? 

Thank you

Aloha and mahalo, 
Kona P.S. I always look forward to receiving your Friday e-mail, it's great.
Hi Kona,

[blush] Thank you!

That's actually a good question.

You borrowed the money from your folks. Their note to you, essentially, says that you are making your loan payments to a third party, on their behalf.

And since you are paying the principal AND the interest on the amount borrowed, you don't have to worry about imputed interest.

One thing you might do is to make sure that you actually have a written loan contract between you and your folks that spells out the terms and also that you will make the payment to a third party on their behalf.

Best wishes,
Eva Rosenberg