Taxpayer Win: Intrafamily Loan Charging the Applicable Federal Interest Rate Is Not a Gift

Intrafamily loans are a powerful estate planning tool — but they’re often misunderstood. Many families worry that lending money to children or relatives will automatically be treated as a taxable gift by the IRS. A recent taxpayer-friendly outcome reinforces an important principle: 👉 When an intrafamily loan charges at least the Applicable Federal Interest Rate (AFR) and follows proper formalities, it is NOT a gift. This clarification is a win for families using smart lending strategies to transfer wealth efficiently.

Faith Otutu

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