Is there a minimum interest rate on land contracts for purchasing a business and land package In Michigan?
Question by Tam R: Is there a minimum interest rate on land contracts for purchasing a business and land package In Michigan?
I have been offered a package deal for a campground and 165 acres on a land contract. I have 2 different lawyers telling me something different. 1 is saying it must be at least 2% interest and the other is saying 4.25%. Is there a minimum.
The Irs talks about federal rates for banks not individual land contracts?
Best answer:
Answer by Ed Atun
Yes. YOu can get it at the Internal Revenue website. It is called the Applicable Federal Interest Rate. Right now you must charge more than 3.53% interest on a long-term loan ( a land loan). 4.25% would be a smart rate so you are well-above the minimum.
If it is a short term loan, it must be more than 2%.
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