Record Low Interest Rate from IRS!

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IRS has set all-time low interest rates for loans made in August, 2012. If you loan money — even to a family member — you don’t have to charge an interest rate higher than 0.25% (!) for a loan of three years or less. For a loan that runs nine years, the minimum interest rate would be 0.88%.

Similarly, if you’re borrowing money or paying for something via a note, these incredibly low rates are the threshold.

So if you’re in a sale with a family member, if you have made a loan to someone where you needed to charge some interest rate for “arm’s length” purposes, an August closing or refinancing can use these rates.

Also, lots of financial experts are recommending that people with significant assets make gifts while the estate tax threshold is $5.2 million (it expires on December 31). With these interest rates, sales are as good — and probably better — than gifts.

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