Is this a legal way to save money on taxes : personalfinance

I own a rental property and the tenant is a close friend of mine. Also I know my income tax bracket in 2021 is going to be significantly higher than in 2020.

Let’s say I talk to my friend and convince him to prepay all of 2021’s rent (call it $10,000). This way I can report $10,000 of rental income in 2020 instead of 2021. However my friend still needs the $10,000 for now and wants to continue making monthly payments. So I give him the $10,000 back as a 0% interest personal loan. Now throughout 2021 my friend will be making me monthly payments but instead of calling it rent, it will now be called loan repayments. For 2021, I would report no rental income (since I would have already paid taxes on it in 2020)

Is this legal?

Source link