[GNC] Convert loan to downpayment

[William Prescott]

Let me preface this by saying, I am not an accountant (IANAA).

As I understand it. You are converting the 600K he owes you into a 600K down payment. And he is treating it as a 720K down payment.

It looks to me like the 120K is either:
A gift from him to you (and subject to gift tax)
or
A discount on the price of the apartment he will build for you (since the outstanding balance on the apartment will be 120K less than if you had just paid a 600K downpayment).

I expect someone with more background in accounting will correct me.

Best wishes,
Will

On 31 Mar 2026, at 17:08, Fred Tydeman <tydeman.fred at gmail.com> wrote:

In a foreign country, I had loaned a developer 600K of their currency.
He had been making interest only payments for some time.
He paid off the 600K loan by converting it into a 720K downpayment on
the loan (I now have from him) to buy an apartment he will build for me.
What is the 120K difference?  How do I record it?
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