Can I gift 70k to my daughter to help her buy a home without incurring tax liability for both of us?

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RichieRich

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Hi all,

I would like to give my daughter 70,000 euro to assist in her buying a home. Can this be done without incurring tax liability for either of us?

It’s a gift so she won’t be paying me back.

Thanks in advance
 
Yes, you can.

She can receive from her parents by gift or will a lifetime total of €335,000.

There is no tax liability for the donor - unless you are selling some asset on which you make a capital gain.

Brendan
 
RichieRich said:
Hi all,

I would like to give my daughter 70,000 euro to assist in her buying a home. Can this be done without incurring tax liability for either of us?

It’s a gift so she won’t be paying me back.

Thanks in advance
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You could always give her a loan of the 70k which would not effect the threshold Brendan mentions.
 
If daughter is getting a mortgage the lender will want confirmation that this is a gift and that you have no claim on the property.
Straightforward to complete, hut just to be aware so no last minute issues.
 
marsaday said:
But Richie said she won’t be repaying it , so how would that work?
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€70k loan today. Next year Richie gives her a €3k tax free gift under Small Gift Exemption, daughter uses it to ‘repay’ €3k of the loan. Rinse and repeat until the €70k is ‘repaid’, no impact on lifetime CAT allowance. If Richie and daughter have spouses it could probably be ‘repaid’ at €12k per annum. Some minimal interest might need to be factored in.
 
Zenith63 said:
€70k loan today. Next year Richie gives her a €3k tax free gift under Small Gift Exemption, daughter uses it to ‘repay’ €3k of the loan. Rinse and repeat until the €70k is ‘repaid’, no impact on lifetime CAT allowance. If Richie and daughter have spouses it could probably be ‘repaid’ at €12k per annum. Some minimal interest might need to be factored in.
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What happens if your parents loan you for example 1 million. Can you decide to pay that off 3k per year or can you agree to repay it at for example €1000 per year? What are the stipulations when repaying the loan?

What happens also if both of the parents who gave you the loan were to die before the loan was repaid?
 
Ok so lets say hypothetically that the OP has a large family and has 10 children, all have spouses.. plus he has the daughter he wants to give money..
Can he gift 3k to each child & their respective spouses?

Then in turn can these siblings abd spouses each gift the daughter 3k? So 20 x 3k, 60k

Extreme example but surely that cant be allowed, even if technically right as its not really in the spirit..
 
dubdub123 said:
Ok so lets say hypothetically that the OP has a large family and has 10 children, all have spouses.. plus he has the daughter he wants to give money..
Can he gift 3k to each child & their respective spouses?

Then in turn can these siblings abd spouses each gift the daughter 3k? So 20 x 3k, 60k

Extreme example but surely that cant be allowed, even if technically right as its not really in the spirit..
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It’s not allowed. The second series of gifts are recharacterised as coming from him.
 
Zenith63 said:
€70k loan today. Next year Richie gives her a €3k tax free gift under Small Gift Exemption, daughter uses it to ‘repay’ €3k of the loan. Rinse and repeat until the €70k is ‘repaid’, no impact on lifetime CAT allowance. If Richie and daughter have spouses it could probably be ‘repaid’ at €12k per annum. Some minimal interest might need to be factored in.
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Wouldn’t the interest be taxable though ?
As it could be seen as a gain
 
Pinoy adventure said:
Wouldn’t the interest be taxable though ?
As it could be seen as a gain
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Yes it would be taxable but the interest need only be at the deposit rate the issuer of the loan might have expected to get with a bank, so maybe 0.0%-0.2% at best.

The SGE is a fantastic way for those with money to leave it to their children in excess of the CAT allowances that less well off folk are subject to.
 
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Zenith63 said:
Next year Richie gives her a €3k tax free gift under Small Gift Exemption, daughter uses it to ‘repay’ €3k of the loan. Rinse and repeat until the €70k is ‘repaid’, no impact on lifetime CAT allowance. If Richie and daughter have spouses it could probably be ‘repaid’ at €12k per annum. Some minimal interest might need to be factored in.
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If you do this make sure that this is well thought through and written down.

There is a high risk a parent will die before repayments are complete. Contract and will should specify what happens then. The simplest thing is that the outstanding balance becomes a gift on death. Yes there could be a CAT liability but probably simpler than a situation where you have to repay the estate.
 
Gordon Gekko said:
It’s not allowed. The second series of gifts are recharacterised as coming from him.
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How complicated or hard is it to arrange these type of loans and not cause problems with Revenue? Do they disapprove of loaning to children outside of house purchase scenario and using the SGE allowance for repayment? Best to stay on their good side if at all possible :)

Thanks,

Up Rovers.
 
We see quite a few similar questions on AAM & more often than not they're framed in the present. That is; the person receiving the loan or gift needs it now or soon.

In the case where 2 parents might want to start gifting Euro6k to each child (under 18yo) on an annual basis now rather than waiting until the kids actually need it.
Not talking about a loan scenario here.

Are there any positive or negative implications with respect to tax due or other potential pitfalls?
No wealth tax as such in Ireland at the moment. Just trying to game out the Pros & Cons of starting to gift to children while they're still under 18.
 
The kinds of issues that tend to be discussed @Horatio are how will the money you gift be invested (risk that it sits on deposit when it could out-earn the tax saved if you invested it in equities in your own name and gift it later), might you need the money for major illness later in life, could the money end up ‘wasted’ when the child takes control when you intended it going towards say their house deposit, perhaps it makes them a target if they’re a bit vulnerable and the big one that is putting me off is could a large sum of money send the child down the wrong path at an impressionable age (they don’t learn a decent work ethic, perhaps it fuels/starts a drug/drink habit etc).

Personally I don’t think the tax saving is worth some of those latter risks. I imagine myself 18 years hence with the option of paying a few thousand to have saved my child from some negative outcome and I’d pay it in a heartbeat, so why lock yourself into that risk now just to save a few quid. Best to keep the money in your own name and do what you can to be financially secure so you can help with house deposits when your kids are older IMO.
 
Right, the risk of squandering or fueling addiction once they turn 18 was on my mind alright - killing them with kindness in a sense.
If I were to proceed I would continue to manage the investments on their behalf, in fact they would not necessarily need to be informed of their wealth until they're 18.

On the vulnerable person front I had in mind that if they were to get married & it didn't work out that their spouse & lawyers could get a significant slice of their personal wealth early in their life / marriage. This would be featuring quite high on my risk list.

I think I agree with you for the most part @Zenith63 & will continue to sit tight for the moment.
 
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