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IRS releases AFRs for July 2019
By Trusts & Estates Practice Group on June 25, 2019 at 1:15 PM

IRS releases AFRs for July 2019The Internal Revenue Service has released the Applicable Federal Rates (AFRs) for July 2019. AFRs are published monthly and represent the minimum interest rates that should be charged for family loans to avoid tax complications.

Here are the rates for July 2019:

 

Annual

Semiannual

Quarterly

Monthly

Short-term

2.13%

2.12%

2.11%

2.11%

Mid-term

2.08%

2.07%

2.06%

2.06%

Long-term

2.50%

2.48%

2.47%

2.47%

   

The Section 7520 interest rate for July 2019 has dropped to 2.6 percent from 2.8 percent in June 2019. We have not seen a 7520 rate this low since January 2018, consequently opening the door to some possible planning opportunities.

The Section 7520 interest rate is the interest rate used in a common estate tax planning technique called a “grantor retained annuity trust” or “GRAT.” In general, the lower the interest rate, the more effective the transaction is for reducing estate taxes.

For more information about GRATs and possibly taking advantage of this lower 7520 rate, please contact someone in our Trusts & Estates group.

Find the full revenue ruling for July 2019 here.

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