Oggi is correct; however, doing so MAY create a potential tax exposure problem for you.
You see, I believe if you don't charge interest, the IRS can still tax you on what they figure you should have earned in interest. The IRS has many "interest rules" regarding making personal loans so the bottom line is that you should talk with your CPA or Tax Advisor on the best way to proceed.
In fact, if one follows IRS guidelines the setting of a loan rate actually depends on:
1) The month your promissory note is created, and
2) The term of the loan: Short-term (3 years or less), Mid-term (> 3 and <=9 years), Long-term (> 9 years).
The setting of what rate is appropriate is "controlled" by the IRS via their monthly Index of Applicable Federal Rates (AFR) Rulings, which you can see here: http://www.irs.gov/app/picklist/list/federalRates.html
I would say there is no reason a seller can't carry the loan if they sell as long as they own the home free and clear. If you have a loan on your house and sell it most banks have an acceleration clause....meaning they will demand to get paid off if you sell. With interest rates at historically low levels most buyers can obtain excellent financing for home purchases. If you would like to sell your home and carry the note call me I would be happy to help. 415-609-5138 Kenton Wolfers Alain Pinel Realtors lic.# 01272467... more