June Interest Rates

The IRS published the applicable federal rates of interest for June, 2020 yesterday in Revenue Ruling 2020-12. Those rates follow:

Short term (0 to 3 years) 0.18%

Mid-term (3 to 9 years) 0.43%

Long Term (9 years and up) 1.01%

These historically low interest rates would be used in intra-family loan and sale transactions to shift wealth without any gift tax consequence.

The required interest rate used for valuation purposes for some more sophisticated estate planning techniques under IRC 7250, like GRATs, intentionally defective grantor trusts (IDGTs), private annuities and self-cancelling installment notes, is 0.60%. This low interest rate makes these planning techniques highly effective.