which afr rate to use for a family loan would depend on the length of time designated for payback 6 let s say you were giving a loan to a family member for 10 000 to be paid back in one year you would need to charge the borrower a minimum interest rate of 4 30 for the loan in other words you should receive 430 in interest from the loan 
in our example above any rate below 4 30 could trigger a taxable event for example let s say you gave the same loan but you didn t charge any interest by not charging any interest you would have foregone 430 in interest income and according to the irs it would be considered a taxable gift any interest rate charged below the stated afr for the particular term of the loan would be considered foregone interest and as a result be taxable special considerations