IRS Stuff
AFR = adjusted federal rate
It's set monthly. For Apr '08 long-term loans it is 4.9%.
If I make a zero percent interest loan, the feds can charge me income taxes on 4.9% even tho I didn't get that money. It's a way for them to keep people from cheating on the gift tax. However...
If I make my son a home loan, do I have to charge the AFR interest. If I go lower I'm still well below the $12,000 per year gift tax limit. There's nothing illegal about charging less than the AFR is there?
Thanks
If I loan my son 100k cash for a home purchase, do I have to charge the AFR percentage? I's like to charge 2% and the Apr '08 AFR is 4.9%. With this small loan there's no way the interest will take me over the IRS allowed "gift" amount. I'm in MO. Also, do I need a deed of trust. It's a...