IRS interest rates will reach another record low in September:
- The interest rate that applies to loans with a term of three years or less is 0.14%.
- The interest rate that applies to loans with a term of over three but not over nine years is 0.35%.
- The interest rate that applies to loans with a term of over nine years is 1.00%.
- The Section 7520 rate (the discount rate that applies to GRATs and CLATs) is 0.40%.
Given the low rates, now continues to be an advantageous time to create GRATs or CLATs, make loans to family members and trusts, sell assets in exchange for notes, or make charitable gifts of remainder interests in personal residences or farms. You may also wish to consider refinancing existing intra-family/inter-trust debt at these lower rates. We note that it is possible that, depending on the results of the November election, the use of GRATs may be limited by the next Congress as soon as January 2021.
