For September 2020, the Applicable Federal Rate for a long-term loan (more than 9 years) is 1%, and the 7520 rate is 0.4%. the Applicable Federal Rate is the lowest interest rate that can be used on a note without the IRS imputing additional interest. The 7520 rate is used for determining the present value of annuity, the value of an interest for life or a term of years, and the value of a remainder and reversionary interest.
These low rates are extremely favorable for various planning opportunities that allow for the transfer of wealth during your lifetime without using much, if any, of your federal estate and gift tax exemption. Please contact us if you would like to discuss possible planning opportunities for you and your family.