[WSBARP] Minimum interest rate, seller financed

[Mark Anderson]

They can contract for any rate to which the parties agree.  However, if the interest rate is below the Applicable Federal Rate (AFR) for the month in which the loan is extended, the discount on the interest rate could be seen by the IRS as a gift that could perhaps affect the sellers lifetime gift exemptions, etc.

Mark B. Anderson
ANDERSON LAW FIRM PLLC
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Tacoma, Washington 98402
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+1 253-327-1751 (fax)
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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Timothy Lehr
Sent: Tuesday, July 29, 2025 1:26 PM
To: wsbarp at lists.wsbarppt.com
Subject: [WSBARP] Minimum interest rate, seller financed

All,

Is there a minimum interest rate that is required by the state or other agency if a client is selling a property to a family member or third party and carrying a note as a seller financed deal? Or can they contract to any rate the parties agree?

Thanks,

Timothy C. Lehr
Attorney & Partner

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