Interest Free Loan from Parents

[mick23]

Hi Folks
I know this has being covered before but im just wondering could anyone please advise me.I am a PAYE worker who fills out self assessment form each year for rental income.

I am intending on getting a interest free loan of 70k from my parents for buying a house. I intend to pay them back in full within 3-4 years.

Im aware that revenue view the nominal interest rate on the loan as a gift and as such this should be declared.

will the interest on this particular loan go beyond the 3k gift exemption per year ?
If I am under the 3k gift exemtion is there a need to inform revenue ?
and if I do need to inform revenue how exactly do I go about declaring this loan to revenue ?

Any help greatly appreciated

m

 

[Nige]

You get a 3k small gift exemption each year in relation to all individuals who give you a gift so if the loan is from both of your parents' funds, the small gift exemption is €6k.

The deemed gift is calculated using the interest your parents would get if they placed the money on deposit which is unlikely to be be €3k not to mind €6k, so it will be covered in full by the small gift exemption.

There is therefore no need to declare it. However, in case of any queries from the Revenue it would be best if you and your parents put in writing that this is an interest free loan, repayable in four years. Everytime you make a repayment, you should ensure that you keep evidence of this (eg bank statements showing the transfer).