home loan from family member

[simonen]

I hope some one can give me some advice on this.

A family memeber of mine wishes to sell us one of their homes (paid off) at a reduced rate. They also want to help us by giving us a mortgage through them at the lowest possible interest rate.

The question I have is how low of an interest rate can they possibly give us without IRS tax problems like gift tax reprocusions?

2.) Since they will service the loan, do they have to follow the prime rate, for example that bank abide by?

3.) Will we be able to deduct the interest from our tax withholdings?

4.) Since they are selling the home at a reduced rate, will there be gift tax issues since the home is being sold for less than market value?

Thanks for the help.

Eric

[HomeGuru]

Originally Posted by simonen

I hope some one can give me some advice on this.

A family memeber of mine wishes to sell us one of their homes (paid off) at a reduced rate. They also want to help us by giving us a mortgage through them at the lowest possible interest rate.

The question I have is how low of an interest rate can they possibly give us without IRS tax problems like gift tax reprocusions?

2.) Since they will service the loan, do they have to follow the prime rate, for example that bank abide by?

3.) Will we be able to deduct the interest from our tax withholdings?

4.) Since they are selling the home at a reduced rate, will there be gift tax issues since the home is being sold for less than market value?

Thanks for the help.

Eric

**A: post tax issues in the Tax Law forum.