Frequently, the loan will be structured so your child or other relative makes monthly interest payments with a principal balloon payment at the end.
The IRS treats loans as either short-term loans (loans three years or less), mid-term loans (loans more than three years but not more than nine years) and long-term loans (loans more than nine years). Following are the AFR rates so far in 2008 for each loan category:
Month in 2008 Short-Term Mid-Term Long-Term
June 2.08% 3.20% 4.46%
May ...(register to read more)
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