girlfriend getting 393k from mother as a gift

my girlfriend is getting 393k as a gift from her mother what will the tax price be on it i know frist 335 will be tax free but what will tax cost her mother is going to pay the tax on it so what will total ove be i make it just 18 grand tax am i correct

If the donor is paying the tax, you gross the gift up and calculate the tax on that figure.

Say an individual's threshold has been used up and they're gifted €100,000 with the tax paid by the donor. The tax would be €25,000 so the total deemed gift is €125,000. The tax is then calculated on the €125,000 (i.e. 25% of €125,000 - €31,250).

Hi Gekko

That's a bit complicated. Surely it's this simple


The recipient pays this tax.

It assumes that they have received no other gifts from the mother.

Brendan Burgess said:

Hi Gekko

That's a bit complicated. Surely it's this simple

Gift| 393
threshold | 332
taxable|61
CAT at 25%|€15k

The recipient pays this tax.

It assumes that they have received no other gifts from the mother.

Click to expand...

Isn't the OP's "mother in law" paying the tax (i.e. the donor is discharging the donee's tax liability making the transaction more complex)?

Proposed gift = €393,000

Group A (i.e. "parent to child") threshold = €332,084

Taxable gift (assuming no prior gifts from mother or father) = €60,916 (i.e. €393,000 less €332,084)

CAT on above gift = €15,229 (i.e. 25% of €60,916)

But mother's discharging daughter's CAT liability, therefore:

Total deemed taxable gift = €76,145 (i.e. €60,916 plus €15,229)

CAT payable = €19,036 (i.e. 25% of €76,145)

The "€3,000 exemption" may of some benefit here. Basically, an individual can receive a €3,000 gift every year from any number of other individuals (i.e. during 2011 I could receive €3,000 from the OP, €3,000 from Brendan, €3,000 from any number of other people and then I could receive the same from them all during 2012 et seq).

A further high level thought - If (for example) the gift is for you guys to buy a home together, and your "mother in law" and girlfriend would be happy to do so, gifting 5% of the proposed gift directly to you might make sense as it would use up your Group C (i.e. "stranger") threshold. You may not want to do this though and your girlfriend and her family may not want to either. Just a high level thought rather than a recommendation and possibly another example of when tax considerations shouldn't drive everything else!

Sorry Gekko

I missed that point in the OP. I was wondering why you had brought it up.

Brendan

confused

ok so when she gets the 393 she would have to pay around 15k out of the 393 in tax leaving her with around 388.000 is that correct i mean if she doesent let her mother pay any of tax thanks for all your help

This is the precise calculation if your girlfriend pays the tax