Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev | Next
Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121150  
Subject: Re: Personal Loan Date: 9/9/2008 4:52 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
What is the maximum term, for creating a personal loan, 
can it go 20, 30, 40 years out, like mortgages? 
______________________________________________
Sure. But in order to avoid tax treatment as a gift, you should have a promissory note
 with interest at least at the monthly applicable federal rate -
 the long-term applicable rate, for a term that long.

Here's this month's rates.

http://www.irs.gov/irb/2008-36_IRB/ar06.html

Internal Revenue Bulletin:  2008-36   
September 8, 2008   

Rev. Rul. 2008-46

----------------------------------------------------------------------

Table of Contents


Federal rates; adjusted federal rates; adjusted federal long-term rate
and the long-term exempt rate. For purposes of sections 382, 642, 1274,
 1288, and other sections of the Code, tables set forth the rates
 for September 2008. 

 
REV. RUL. 2008-46 TABLE 1  
Applicable Federal Rates (AFR) for September 2008  

Period for Compounding 

      Annual   Semiannual   Quarterly   Monthly 

     Short-term 
AFR        2.38%   2.37%   2.36%   2.36% 
110% AFR   2.63%   2.61%   2.60%   2.60% 
120% AFR   2.86%   2.84%   2.83%   2.82% 
130% AFR   3.10%   3.08%   3.07%   3.06% 
                  
     Mid-term 
AFR        3.46%   3.43%   3.42%   3.41% 
110% AFR   3.81%   3.77%   3.75%   3.74% 
120% AFR   4.16%   4.12%   4.10%   4.09% 
130% AFR   4.51%   4.46%   4.44%   4.42% 
150% AFR   5.22%   5.15%   5.12%   5.10% 
175% AFR   6.09%   6.00%   5.96%   5.93% 
  
    Long-term 
AFR        4.58%   4.53%   4.50%   4.49% 
110% AFR   5.04%   4.98%   4.95%   4.93% 
120% AFR   5.51%   5.44%   5.40%   5.38% 
130% AFR   5.98%   5.89%   5.85%   5.82% 

REV. RUL. 2008-46 TABLE 2  
Adjusted AFR for September 2008  
Period for Compounding 
    Annual   Semiannual   Quarterly   Monthly 
Short-term adjusted AFR   1.81%   1.80%   1.80%   1.79% 
Mid-term adjusted AFR     3.21%   3.18%   3.17%   3.16% 
Long-term adjusted AFR    4.53%   4.48%   4.46%   4.44% 

REV. RUL. 2008-46 TABLE 3  
Rates Under Section 382 for September 2008  
Adjusted federal long-term rate for the current month 4.53% 

Long-term tax-exempt rate for ownership changes during the current
 month
 (the highest of the adjusted federal long-term rates for the current month
 and the prior two months.)  4.65% 

REV. RUL. 2008-46 TABLE 4  
Appropriate Percentages Under Section 42(b)(2) for September 2008  
Appropriate percentage for the 70% present value low-income housing credit  7.93% 

Appropriate percentage for the 30% present value low-income housing credit  3.40% 

REV. RUL. 2008-46 TABLE 5  
Rate Under Section 7520 for September 2008  
Applicable federal rate for determining the present value of an annuity,
 an interest for life or a term of years, or a remainder or reversionary interest  4.2% 
__________________________________________________
You only care about the AFRs from Table 1.

In this case the long-term rate (over 9 years) is 4.49% 
if you're making monthly payments, and 4.58%
for annual payments.

These numbers are updated monthly; but once you make a loan
agreement,
you stick with the rate in effect in that agreement. 
(Unless your loan agreement calls for a floating rate, which is fine.)

Bill
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev | Next

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
Post of the Day:
Value Hounds

Kate Spade's Wild Ride
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement