First, we should understand that loans are not gifts, secondly, the IRS has a strict tax rule on both family gifts and a family loan. Note, the annual limit for tax-free gifts to individual family members is $14,000, in this case, it is important to include interest rate since the said amount is more than the $14,000, also the interest on the loan must be at least as high as the minimum interest rates set by the IRS. Therefore, in this scenario, the loan has to come with an interest rate.
