Trump taxes show how his heirs are scoring easy cash with loans from their father
More information is being revealed in the Donald Trump tax returns that were released by the House Ways and Means Committee last month. Among the findings were that Trump gave loans to his adult children with a pretty sweet interest rate.
Forbes reported Tuesday that Trump's children are saving "a small fortune" by getting money from their father instead of through a bank.
Congress has called the "loans" akin to giving "disguised gifts" to dodge paying a gift tax. The ultra-rich can give money to whomever they wish, but in 2022, gifts can't exceed a $12.06 million lifetime tax exemption. Doing it through a "loan" with a low interest rate and a slow payment plan essentially skirts that rule.
"The younger Trumps owed their father a collective $4.55 million and paid him roughly $50,000 in annual interest from 2015 to 2020, according to the documents. That figure suggests the heirs paid an overall interest rate of about 1.1%," said Forbes.
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The IRS has a minimum acceptable rate at 1.1% for long-term loans, which are those more than nine years. But when asked about it, Eric Trump told Forbes about the loans, "Please don't assume they were long-term." Yet, according to the documents, Ivanka, Eric and Don Jr. have owed Trump the money for more than nine years.
One example of the loans come from Ivanka Trump after she graduated from the University of Pennsylvania. When speaking to Oprah Winfrey, she said that "a great gift that my dad gave me recently is an apartment because I'm graduating and I don't want to live at home anymore." But when the deed appeared in the public record it showed Ivanka purchased it. She paid $1.5 million for the property which was worth about $2.5 million at the time, the report said.
"Donald Trump’s personal balance sheets suggest that Ivanka borrowed all the money she needed from him and that she did not have to make regular principal payments on the loan," said Forbes.
In her book The Trump Card, Ivanka wrote, “I own a two-bedroom apartment in a Trump building, but no one gave it to me. Nor did I benefit from an insider price. I’m paying a mortgage on my apartment, just as my brothers, Don and Eric, pay mortgages on their apartments in other Trump buildings. Admittedly, I pay my mortgage directly to my father instead of to a bank, but it’s a mortgage just the same.”
Eric Trump also scored a $2.04 million apartment that he borrowed $2 million from his father to afford. At the time, a 30-year mortgage interest rate was more than 6 percent, Forbes explained. Between 2015 to 2019, Eric paid $24,000 of annual interest, which is closer to 1.2 percent. In 2020, Eric paid only $19,605, which is less than 1 percent in interest.
"Don Jr. followed a slightly different path than his siblings, buying apartments in multiple New York City buildings. In 2010, he wiped out the debt on one of the units when he sold it for $855,000 more than it cost him to buy," said Forbes. "He retained $1.05 million of debt, however, that his father appears to have given him against another property. Don Jr. paid the lowest interest of any of the three Trump kids, according to an analysis of his father’s tax returns and balance sheets, just 0.8%, adding up to $8,715 a year."