Hi folks, I need your help because I don't know how to solve a problem that will probably arise next year when filing my tax return for 2023.
My partner and I have purchased an apartment abroad (EU). We signed a purchase agreement with the developer in which each of us has agreed to pay half the price.
My OH earns much less than I do, so I have committed to paying for my share and about 50% of their share so that they don’t need to take a loan. The developer needed to receive exactly 50% of the amount of the property from our accounts separately, therefore I sent my other half the missing amount to his account so that they would have enough funds (we’re talking about 40k CHF) to make the transfer. They will pay me back monthly within next 2 years so we could consider that a private, verbal loan.
Does it have to be regulated somehow by law? Should we make some kind of agreement between ourselves? I am not afraid of losing money if things would go south between us. I’m worried if the OH has to declare the amount they received from me this year (and 40k CHF makes over half of their annual income). Will I be obliged to declare the amount I will be getting back from them every month (I assume that would be ca. 500 CHF/month).
We are not married and our partnership is not registered.
Interest between private people is assumed to be zero, so just declare the (remainin) debt as asset. The monthly pay back isn't income, it just reduces the remaining debt (credit and asset from your point of view). Your wealth is unchanged because the money merely got replaced by the outstanding credit (which you have to declare to the tax office).
Yes, absolutely put it in writing.
Points to mention are creditor, debtor, amount, interest rate, monthly pay back and by when it's expected to be paid back. It won't hurt to mention that it serves as the other's equity of the property abroad.
It would be advisable, as there's currently nothing to say it wasn't a gift, rather than a loan. Indeed, if you paid it directly when purchasing the property, then there's actually no evidence of the loan on paper at all. Whether this means your partner currently owns a quarter or half the property legally, I can't say.
I think the fact that it is a loan and not a gift is implicitly confirmed by the fact that OP declares it as a loan on their taxes, i.e. they admit it is their money and accept tax liability for it, so the current status of that money is uncontroversial since both parties agree on it