Any tax issues arising from giving a son an interest-free mortgage?

L

Louis

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A friend of mine and his wife are lending their son about €400k interest-free to buy a house.
A full mortgage will be drawn up so that if the son sells the house, the loan must be repaid.

I understand that the only issue arising is that there will be deemed an annual gift of around €4,000 a year which is below the €6,000 the two parents can give between them as a small gift.

Do they need to do anything in the mortgage agreement to make sure that they avail of this ?
For example, should the father give a mortgage of €200k and the mother a separate mortgage of €200k?

If interest rates rise, and it exceeds €6,000 a year, it will just use up the Class A threshold.
 

Bank of mum and dad

I note a recent kerfuffle in the media about children being taxed if they receive interest free loan from parent. It seems this has been kicked to touch. But I can't really get to grips with current status. Let's say my mother loans me 40k. How do I 'prove' this is not a gift, and how do I...
www.askaboutmoney.com
There was a push last year to try make you report these loans, but it got stomped out due to all the paperwork it'd involve.

Things might start changing a bit if the interest rates keep going up as that might push the year interest above the yearly gift allowance.
 
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