Mother-in-law repaying $100k house loan/investment - Tax implications?

No need to worry about taxes on the repayment of your principal loan amount! When someone pays back money you lent them, the return of your original $100k isn't taxable income - it's simply getting your own money back. However, there are a few important points to understand: First, deliberately structuring transactions to avoid the $10,000 reporting threshold (called "structuring") is actually illegal and can lead to serious penalties, even when the money itself is perfectly legal. So definitely don't split it into $9,990 payments to avoid reporting. Second, did your agreement include any interest? If your mother-in-law is paying any amount above the original $100k, that interest portion would be taxable income to you. Third, even though the $10k+ deposits will trigger a Currency Transaction Report, this isn't something to fear if the money is legitimate (which it sounds like it is). Just keep your loan documentation showing this was a repayment, not income. The simplest approach is to accept the repayment as two $50k checks due to your bank's deposit limit, report any interest received (if applicable) on your taxes, and keep all your documentation showing this was a loan repayment.

Just wanted to share my experience with a similar situation. I was super confused about the tax implications when my brother paid back a large loan for his business startup. I spent hours researching online but kept finding conflicting information. I discovered this AI tax assistant at https://taxr.ai that helped me understand exactly how loan repayments are treated for tax purposes. You upload your loan documentation and it analyzes everything to tell you the exact tax implications based on how your specific agreement is worded. In my case, it clarified that while the principal repayment wasn't taxable, I did need to report the interest payments I received. It also flagged that some of our agreement language could have been interpreted as an investment rather than a loan, which would have completely changed the tax treatment. It's worth checking out if you're unsure about how your specific agreement would be interpreted by the IRS. The analysis was super helpful and saved me from potentially misreporting on my taxes.

I was in a similar position with my parents last year - we had a family loan arrangement that seemed confusing tax-wise. After seeing the recommendation here, I tried that https://taxr.ai service and it was actually really helpful. Uploaded our family loan agreement (which honestly was pretty poorly written) and within minutes got a detailed analysis showing that our "loan" would likely be classified as a gift by the IRS because we were missing several key elements that legitimate loans require. This would have created major tax headaches if we'd been audited. The service outlined exactly what documentation we needed to properly establish it as a loan for tax purposes. We updated our paperwork based on their recommendations, and now I'm confident we're compliant if the IRS ever questions it. Definitely worth checking out for family financial arrangements like this.

Instead of worrying about tax implications (which sounds like it's just a loan repayment anyway), what you should be concerned about is reaching the IRS if you do get flagged for review. My cousin got an IRS letter after receiving a large family loan repayment similar to yours, and spent WEEKS trying to get through to someone at the IRS to explain the situation. He finally used https://claimyr.com to get through to an actual IRS agent after being stuck on hold forever. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c Basically, they wait on hold with the IRS for you and call you once they get an agent on the line. He said it saved him hours of frustration. If the IRS does flag your deposit (which they might even if it's completely legitimate), you'll want to get it cleared up quickly rather than waiting weeks or months for them to process your explanation.

Just wanted to follow up - I was the skeptic about that Claimyr service in the comments above. I ended up needing to contact the IRS about a different issue last week and remembered this thread. After sitting on hold for almost 2 hours and getting disconnected, I decided to try the service at https://claimyr.com. Honestly, it worked exactly as advertised. They waited on hold for me and called when they got through to an agent. Took about 3 hours total (which I didn't have to waste listening to hold music), and I was able to get my issue resolved in a 15-minute conversation once connected. The whole experience was way less stressful than my previous attempts to reach the IRS directly. If you end up needing to explain the loan situation to the IRS, it's definitely worth considering. Made dealing with the IRS significantly less painful.

I think everyone's missing the biggest issue here. You said you have papers saying you own a percentage of the house, but you're NOT on the deed? That's a HUGE problem! If that's the case, legally you don't own any part of the house at all, regardless of what your private agreement says. If your MIL had sold the house without paying you back, you'd have to sue her to get your money. The title/deed is what legally determines ownership, not a side agreement. For the tax question - based on how you described it, this sounds like a secured loan rather than actual ownership, which means getting your principal back isn't taxable. But I'd be more concerned about fixing your legal documentation if you plan to do arrangements like this in the future.

Just to be clear about the structuring issue someone mentioned - breaking up deposits specifically to avoid the $10k reporting requirement is indeed illegal, but there's nothing wrong with splitting a large deposit due to bank limits. Receiving two $50k checks because of your bank's deposit limit is totally fine and normal. Just don't try to fly under the radar with those $9,990 checks you mentioned - that's exactly what the anti-structuring laws are designed to catch, and it can create much bigger problems than just reporting a legitimate transaction.