Family loan

[csoburns]

I will be loaning money to one of my parents , its going to be in around the 20k amount. The problem is one day I may inherit my parents house and due to gift tax regulations this may cause me to have to pay tax on the house over a certain amount and this may force me to sell the family home to pay it off.

Ideally I didn't think much about interest on the loan,family and all, but because revenue would have the last say on weather its a gift or a loan I would like to do it properly so that I dont run into any issues down the line.

Do you think 10% on the loan is enough to prove its a loan?
Should I get a signed document as well to say its a loan?
Is there anything else I need to be aware of?

 

[Brendan Burgess]

I don't think that you need to do anything other than write an agreement to say that it is a loan and not a gift.

In theory, the Revenue could assess your parents for a gift equal to the interest if you don't charge interest. But the Revenue is not worried about stuff like that and it would fall well within the thresholds.

I don't see the relevance to your inheriting the family home? If they leave you a house worth €500k but they owe you €20k, then your gift will be €480k.

Brendan