AVOID THIS TRAP AT ALL COSTS

Reclassifying past-due payments as increased principal might seem like a favor to the borrower, but it could quietly trigger a Phantom Tax liability for the lender.

Here’s the kicker: When earned but unpaid interest is retroactively reduced, the borrower may claim a deduction, while the lender takes a tax hit on income that was never truly earned. It’s one of the easiest, and most overlooked ways to lose money in private lending.

Avoiding these traps isn’t about luck, it’s about knowing the rules, or working with pros who do.

I’ve helped manage over 50,000 loans, and I’ve seen what works, what fails, and how to stay five moves ahead.

Want to avoid costly mistakes and protect your returns? I share real-world tips that private lenders can actually use.

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Cheers,