[WSBARP] Minimum interest rate, seller financed

[Eric Nelsen]

What Mark said. I have to re-research this every time I handle one. Start by searching for explainers on "imputed interest."
https://www.irs.gov/applicable-federal-rates
https://turbotax.intuit.com/tax-tips/tax-payments/irs-tax-rules-for-imputed-interest/L7UbulHpC

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Mark Anderson
Sent: Tuesday, July 29, 2025 1:34 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Minimum interest rate, seller financed

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
821 Dock Street, Suite 209, PMB 4-12
Tacoma, Washington 98402
+1 253-327-1750
+1 253-327-1751 (fax)
marka at mbaesq.com<mailto:marka at mbaesq.com>
www.mbaesq.com<http://www.mbaesq.com/>
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From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto: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<mailto: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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p: 360.855.0131
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