Posted by Wayne-NC on April 20, 2007 at 12:41:33:
But this is an IRS rule and it gets quite complicated (doesn’t it always). Why not take a deduction “at the end of the day” anyway?
In its’ most simple form, "When no interest or low interest is provided in an Installment Sale agreement, part of each payment will be treated as interest. The amount treated as interest is referred to as unstated or imputed interest. Imputed interest reduces the selling price and increases the seller’s interest income and the buyer’s interest expense."
Another question comes to mind with zero interest money. Was the property purchased at or more than FMV? If so, there is the cost of funds to obtain the property. Otherwise given the time value of money, it can be viewed as an additional discount from an already good price.