Can a seller legally sell a property and accept payments with no interest?
Legally, sure. There's no law that says a lender MUST charge a non-zero interest rate.
For tax purposes the IRS may require you (the mortgage holder) to pay tax on "imputed" interest. I don't know how the calculation works, but they assume some of the $$ you are receiving is like interest.
The IRS establishes a minimum rate that you must impute. Then you basically create a loan amortization schedule using their interest rate, the total payments/sales price and timeframe. This will calculate what amount of the payments you recieve each year is considered interest income.
The last time I checked the imputed rate was 5% from the IRS. This also works in your favor when you get a car financed at zero percent you can still write off the imputed interest rate.
As always check with a CPA though I will tell you some don't know about this.
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