Even between relatives, a contract for deed would be best handled by a qualified real estate attorney. Concerning interest, as I understand, the issue is not any statutory requirement with the state, but that the IRS will impute an interest rate and income will need to be reported each year regardless whether the contract provides for it. You should discuss this aspect with either your attorney or your tax professional.
There is no minimum interest rate imposed by Illinois law. However, if the interest charged is less than the applicable federal rate published monthly bthe Internal Revenue Service (IRS), the IRS can consider part of each payment to be interest rather than payment of principal on the land purchase.
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