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Stephen G.
Stephen G., Sr Income Tax Expert
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Stephen, when you said around 3% is this per annum?

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Stephen, when you said around 3% is this per annum?
Submitted: 4 years ago.
Category: Tax
Expert:  Stephen G. replied 4 years ago.
Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Yes, per annum. But let me get the applicable interest rate. Hold on.
Expert:  Stephen G. replied 4 years ago.

Here's a link to the "Applicable Federal Rates" for 2012.

The minimum short term rates are so low, ie. a fraction of 1% per annum, that almost any rate you want to charge would be sufficient.

Do you have a rate in mind?

What is your objective?

You might consider giving your friends an option or a first refusal, but to tie up your house for an unknown period of time, in exchange for such a small amount of compensation, would be a very favorable deal for them, but not for you.

What if their house doesn't sell? At a minimum, you should attach a time limit to the deal. Also, if you don't have any security for the note, situations change & there would be no incentive for them to complete the deal, except your friendship.
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Expert:  Stephen G. replied 4 years ago.

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