Legal Question in Real Estate Law in Illinois
We have some farm ground that we want to sell to the person who is raising crops on it. We would like to help him avoid bank loans so we are going to allow him to pay us monthly for the property. Is there a minimum interest that we must charge him? We are in Illinois.
Thank you
2 Answers from Attorneys
There is not any interest you are required to charge, but the IRS will impute a certain amount of interest for the purposes of income taxation. Speak with your tax accountant. As far as the transaction, it will be in the interest of both sides that an attorney draw up the Agreement for Deed (aka "Land Contract") and that formalities are included, particularly title insurance.
I agree with Mr. Repay. As an example, one of the considerations will be how long of a land contract you make it for - as there are short- and long-term "applicable federal rates".
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