The Internal Revenue Code prescribes minimum imputed interest rates and time-value-of-money factors applicable to certain loan transactions and estate planning techniques. These rates are tied formulaically to market interest rates. The Internal Revenue Service updates these rates monthly.
These are commonly applicable rates in effect for July 2017:
Short Term AFR (Loans with Terms <= 3 Years) 1.22%
Mid Term AFR (Loans with Terms > 3 Years and <= 9 Years) 1.89%
Long Term AFR (Loans with Terms >9 Years) 2.60%
7520 Rate (Used in many estate planning vehicles) 2.2%
We previously blogged that the Florida Legislature enacted a reduction to the state sales tax rate on commercial real property leases from 6% to 5.8% effective January 1, 2018. The language of the new statute is unclear as to whether the rate decrease would apply to current leases. However, we have confirmed with a representative of the Florida Department of Revenue that they interpret the rate reduction as applying to current leases for periods after December 31, 2017.