What Private Money Lending Documents are NEEDED

[Michael Conte]

I have purchased my first BRRRR property with private money provided by my mom. I am not sure which documents are needed in order for her to only be taxed on the interest she receives and not the principal payback. I may just be overthinking this. My lawyer and her CPA (who admittedly has no experience with this) both claim that a promissory note and a filed mortgage/deed of trust are needed for her to be properly taxed only on the interest she receives. Speaking with other experienced investors I have been told that only a promissory note is needed. If anyone could give personal experiences/insight it would be greatly appreciated. Being tax season, I haven't had any luck reaching out to other CPAs with how this should be done.

Other helpful info: Located in New Jersey. Property held in LLC. Principal and interest will all be paid back in a lump sum after cash out refi.

BONUS QUESTION: what kind of cash out refi rates have you gotten on LLC held properties?