Money Loan or Money Gift from Parent to children

Discussion in 'Tax' started by tcl, Nov 10, 2005.

  1. tcl

    tcl Registered User

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    11
    Hi,
    If my mother were to split money that she inherited between 5 of her children… ~100,000 euros would each of those children have to pay tax on each of their share? Would it be better to receive this as a GIFT or as a LOAN? What is the best way to go about this?
     
  2. Glenbhoy

    Glenbhoy Frequent Poster

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    Re: Money Loan or Moeny Gift from Parent to children

    you each can receive approx 450K from your parents during your lifetime without incurring any tax. See revenue.ie for exact figure.
     
  3. johnnybegood

    johnnybegood Frequent Poster

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    Re: Money Loan or Moeny Gift from Parent to children

    hi the exact figure is €466,725 for 2005 for gifts/inheritances.

    Glenbhoy is correct in stating that you can receive this amount tax free during your lifetime without incurring tax. However you should check when your mother inherited the money as if it is less than 2 or 3 years (i think) then this would affect the tax.

    for example, people cheat by doing the following, if my grandfather gave me €100,000 (as i am his grandchild i can only receive €46,673 tax free and would have to pay tax on the balance), now if my grandfather gave it to my dad (limit is €466,725 = no tax) and then my father gave it to me (again limit €466,725 = no tax)

    NOT AS EASY AS THAT the revenue deem this a gift from my grandfather to me even though it passed through my father. its an anti avoidance tax measure. so therefore do your research get on to the revenue website and check it out.

    My father would have to hold onto the money for 2 or 3 years before gifting it to me so that i paid no tax. hope that helps!
     
  4. tcl

    tcl Registered User

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    11
    Re: Money Loan or Moeny Gift from Parent to children

    thanks for the Info Gelnbhoy and Johnnybegood....

    would you have any idea how I should invest the 20K...I am interested in getting a property but not too tied to that idea as I do not have pay rent where I am staying...I am a bit wary of the property market here in Ireland as things seemed to have stabilised and also interest rates are said to take a rise....I was also wondering about foreign property also...it is cheaper than Ireland and in some places like the czech republic they are offering 7% guar. rental yeilds...someone else was telling me to get financial advice as regards equities as these are on the up...

    would appreciate any advice/opinion on this
     
  5. Thrifty

    Thrifty Frequent Poster

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    Re: Money Loan or Moeny Gift from Parent to children

    Hi TCL, before i bought a property here i would have liked to invest in oversee's property as the prices were/are so much cheaper and i had rent free accommodation here. The thing that really put me off apart from the property being in another country and therefore being less easy to monitor and do work on was the thought of later buying here and paying thousands out on stamp duty becuase i'd lost my first time buyers status by buying abroad. I'm not saying that you still might not better off buying abroad - you may still work out better off but it is something to consider.
     
  6. tcl

    tcl Registered User

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    11
    Re: Money Loan or Moeny Gift from Parent to children

    hi,

    thanks for the feedback so far!

    With regards inheriting or receiving money from a parent. Can you only receive ONE amount or gift tax free? ie., if I receive a gift from a parent now of 20K for example without tax, will that mean that in the future, will any future inheriteance get taxed? Is this €466,725 tax free amout only applicable to a once off payment? If so, then there is no point now in me receiving any gifts from parents as it will mean that any future inheritance will get seriously reduced by tax.
     
  7. Glenbhoy

    Glenbhoy Frequent Poster

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    435
    Re: Money Loan or Moeny Gift from Parent to children

    You are allowed the cumulative amount of 466K over your lifetime, so if for example you receive 20K now, another 200K next year and 230K the following year from (all from your parents of course, lucky bugger:) ) all of these amounts will be tax free. If you were lucky enough to get another 50K the following year, that would come into the tax net. (This advice is basically correct, but to be honest it's been a while since I studied this and the system has changed), it's probably worth your while talking to a professional (as a group, it won't cost much) as you may need to file returns, even though you will not have to pay tax.
     
  8. peterwilson

    peterwilson Frequent Poster

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    Sorry to drag this thread up but is the limit still the same?
    Is it ok the receive a gift from a parent of up to 466K

    thanks
    p
     
  9. peterwilson

    peterwilson Frequent Poster

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  10. dockingtrade

    dockingtrade Frequent Poster

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    what about child to parent?
     
  11. peterwilson

    peterwilson Frequent Poster

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    If a parent inherits from their child, and have full and complete ownership of the inheritance it is exempt from tax if, in the previous five years, the child took an inheritance or gift from either parent and it was not exempt from Capital Acquisitions Tax. In this case, no tax needs to be paid even if the inheritance from the child is over the threshold.
     
  12. stanbowles

    stanbowles Frequent Poster

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    Follow up query on gift tax: if I receive a cash sum as a gift from a parent which is signficant but well below the 400k+ exemption, am I liable for income levy?
     
  13. deadlyduck

    deadlyduck Frequent Poster

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    A cash sum received by way of a gift is not classified as income- it's capital. The income levy would not apply.
     
  14. stanbowles

    stanbowles Frequent Poster

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    thanks deadlyduck, excuse my ignorance but would you be aware of a reference for this? Is there some piece of revenue documentation that sets out what counts as capital payments and what as income payments ... I read the extensive list of types of revenue that qualify for immediate 'off the top' income levy and my impression was that it was intended to cover all bases.

    Stan