The Applicable Federal Rates (AFRs) for December 2022 have been made public by the Internal Revenue Service. The minimum interest rates that should be charged for family loans to avoid tax complications are represented by AFRs, which are published on a monthly basis.
The Section 7520 interest rate for December 2022 is 5. 20 percent. A “grantor retained annuity trust,” or “GRAT,” is a popular estate tax planning strategy that uses the Section 7520 interest rate. “Generally speaking, the transaction is more effective at lowering estate taxes the lower the interest rate.”
Please get in touch with a member of our Trusts & Estates group for more details about potentially taking advantage of these low AFRs.
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FAQ
Does the IRS require interest on family loans?
Any loan between family members must be made with a signed written agreement, a set repayment schedule, and a minimum interest rate, according to IRS regulations.
What is the short term AFR rate for 2022?
| Month | Annual | Monthly |
|---|---|---|
| Sept. | 3.05% | 3.01% |
| Oct. | 3.40% | 3.35% |
| Nov. | 4.10% | 4.03% |
| Dec. | 4.55% | 4.46% |
What is the minimum interest rate allowed by IRS?
If you charge no interest rate or an interest rate under two, you might be subject to tax consequences. 51%.
What is the IRS interest rate for 2022?
Interest Rates in 2022 by CategoryUnderpayment (Corporate and Non-Corporate)6%5% GATT (part of a corporate overpayment exceeding $10,000)3 Fourth Quarter (Oct.-Dec.) Third Quarter (Jul.-Sep.) 5%2. Internal Revenue Code (IRC) 6603 Deposit (Federal Short-Term Rate)3%2% Large Corporate Underpayment (LCU)5%8%7%