Willy

[werwin7448]

I am looking to buy land on a land contract where the seller offered 0% interest. We would do a down payment as well as monthly payments for 1 year where all of the money paid would go against the principal. He was advised by a family member who is a layer, that per the IRS he must charge an interest rate. Is this factual, and if so, WHY?

 

[Michael Wechsler]

I am looking to buy land on a land contract where the seller offered 0% interest. We would do a down payment as well as monthly payments for 1 year where all of the money paid would go against the principal. He was advised by a family member who is a layer, that per the IRS he must charge an interest rate. Is this factual, and if so, WHY?

My thinking on this is that without charging interest it could be considered a taxable gift.