Received Cash from Parents

redunited

Registered User
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Looking for some advice, so thanks in advance!

My Parents last November gave myself and my wife €12,000 as a deposit to purchase a property. As I understand it this cash can be claimed tax free under the small gift allowance, €3000 per parent to me and my wife. €6k from my parents to me, €6k from my parents to my wife.

My parents then decided that they wanted to help us out again and instead of us taking a mortgage from the bank they would loan me the money to complete the house purchase.

We purchased the property for 145k, €12,000 we used from the previous cash my parents gave us €133,000 loaned to us by my parents.

My agreed repayment to my parents is €400 per month, they don't want any interest from the loan.

Does the loan exempt me from CAT or do I need to use my threshold allowance?

My thinking is that CAT would only come into force if the loan becomes a gift, say on the death of both parents, and it would be the loan minus any repayments I have made?

Ive also read that the small gift allowance would cover any interest on the loan and could I also use the allowance to reduce the loan futher?

Do my parents have to declare the loan as an income and be liable for income tax?

Do I need to declare anything?


Finally If I simply decided to declare the €133,000 my parents loaned me as a simple gift I understand that I don't need to file any paperwork because the gift does not extend over the 80% threshold allowance due to not receiving any previous gifts from my parents? (other than the small gift allowance)

Thanks for any help you can give and advice.
 
Your understanding is broadly correct. The loan constitutes "free use of property". Its value for gift tax purposes is the opportunity cost to your parents of not having the €133,000. How does one quantify that? Rather helpfully using call deposit rates which as everyone knows are on the floor. Applying a rate of 1% would be acceptable, so in your case there's an annual gift of €1,330 which is comfortably covered by your €6,000 / €12,000.
 
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