are down payments towards mortgages considered "loans" to your business?

[Account Closed]

Hey BP.

I had a discussion with a friend about real estate investing in which he stated that all finances used towards down payments for a mortgages can be considered a "loan" to the business and thus recouped 'tax free'. I wanted to get a second opinion on this. Is this true? Any feedback would be greatly appreciated.

[Steven Hamilton II]

Depending upon the type of business:

If you make contributions, you can typically pull out your contributions tax free.

S-corporation and partnership: You can utilize a simple distribution, nothing becomes taxable until you withdraw more than you have contributed to the business.

In a C-corporation through the use of Nontaxable Distributions(I.E. Return of capital). Anything above your total contributions is considered taxable.

-Steven