February Federal Interest Rates

The IRS released its interest rates for February, 2021. These rates will be used for intra-family loans, or perhaps the interest rate on a note given in an installment sale to a grantor trust. If the rate is used, then there will be no ‘deemed gift’ in the transaction.

Short-term (0 to 3 years):           0.12%

Mid-term    (3 to 9 years):           0.56%

Long-term   (9 years or longer): 1.46%

The IRC 7520 rate, which is used to value a retained interest in a life estate, a GRAT, or a QPRT, will be 0.6%. The lower the IRC 7520 rate, the higher the value of the retained interest by the transferor, and thus the lower the value of the ‘gift’ of the remainder interest in the GRAT or QPRT.