Lending Club investing unfortunately is not considered a passive investment by the U.S. Government. This means you cannot get the long term capital gains tax rate. Therefore the IRS taxes any profit as ordinary income (unlike stocks). To minimize taxes, Lending Club investments might be best suited to a Roth IRA retirement account. I’ve reviewed Lending Club before and have had decent returns. Unfortunately, my own Lending Club investments are within a taxable account.
- $5,000 and receive a 1.5% cash bonus
- $25,000 and receive a 2% cash bonus
- $50,000 and receive a 2.5% cash bonus
- $100,000 and receive a 3.0% cash bonus
By depositing within a Lending Club IRA, it’s like getting an instant return on your money. To receive your bonus, all funds must be newly transferred between the date you enrolled in the program (but not earlier than November 15, 2010) and December 31, 2010, continuously maintained in your Lending Club account and fully invested on the Lending Club platform by January 31, 2011. Existing account balances and transfers prior to your program enrollment date will not be counted towards satisfaction of the necessary transfer amount to earn this bonus. Your bonus, if any, will be deposited into your account or mailed to your address on file by February 15, 2011. Program may be discontinued at any time without notice. Failure to fully invest the new funds by January 31, 2011 will result in your not qualifying for this bonus. Transactions in the secondary market (the trading platform operated by FolioFN) do not count as “investing funds” towards earning the bonus. This bonus payment, if earn ed, is taxable so please consult with your personal tax adviser. You are responsible for any taxes related to this offer. Void where otherwise prohibited. This offer may not be combined with any other offer.
I will post my progress on Lending Club results. Subscribe to my blog for updates.
That’s very disappointing that one is taxed at the normal income tax rate. Bummer… that really puts a damper on wanting to throw some money their way.
Well look at the bright side. If long term capital gains go up to 20% for most, Lending Club taxable accounts become a much more attractive investment.