Questions about small gift exemption

E

EmmDee

Registered User
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Hi. I am considering making small gifts to my children (in their 20's) under the €3k threshold. There are a couple of complications so I wanted to check if my assumptions are right;

1) One child is living at home and still in education. I currently provide them monthly funding for living. Does this monthly amount count towards the €3k limit? (i.e. if I gave them €100 per month then I could only gift an additional €1,800). I'm assuming it does.

2) The other child lives abroad in Germany. In theory they have no tax liability here but if I were to gift in excess of the €3k limit, I'm assuming it would count against allowances once it came to inheritance. So probably best to stay under the Irish tax limit. As far as I can find, in Germany there is no specific gift limit but rather a lifetime "allowance" covering gifts and inheritance. If they are still there once it came to inheritance there seems no way around that. Is anyone aware of other gifting issues in Germany.

Thanks in advance
 
Do you have a partner? If so they could give them up to €3,000 each also.

1- Yes the €100 p/m would count against the limit for this year.

2- Yes if you gave them over €3,000 this year it would count against allowance.

As the €3k limit is an annual exemption you can give it again in January.
 

Thanks - yeah I was aware that my spouse could do the same but I wanted to check on the status of the existing allowance. Appreciate it
 

Probably wrong on Point 1 as support maintenance and education is fine if <25 and in education...sounds like that is the case
 
Parents gift children amounts in the thousands all the time. The Revenue aren't interested in once off small gifts like this. Have you ever heard someone getting a letter from the Revenue after their parent's paid for a wedding? I wouldn't worry about it.
 
Thinking about this, potentially, could myself and my husband gift our children up to 6k a year towards a house deposit without incurring gift tax for them or reducing their inheritance threshold? Can this start at any age, or do they need to be 18+?
 

The answer to your first question is yes. And if any of your children had partners, you could increase that to €12k by each gifting €3k to the partner as well (doesn't need to be related). For the second part - I'm not sure but I would imagine yes.

This is partially why we are looking at it. It's only a small amount in the scheme of things but if you start early it is a way of avoiding inheritance or gift tax and also makes it easier if you can avoid guarantees, gifts, partial ownership - whatever else is needed to get over the "source of funds" question for deposit requirements.
 
Ok, now we just need to arrange our finances so we are in a position to do so! And also so they are either unaware or unable to access it...
 
misemoi said:
Ok, now we just need to arrange our finances so we are in a position to do so! And also so they are either unaware or unable to access it...
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You have to gift it to them. You can set up a bare trust if they are under 18. Once they are over 18, it's their to spend.

This is where you sit down with them and explain the purpose of what you are doing. And that while it may be tempting for them to use the money for other things, it would break your trust in them if they spent it on booze. If over 18, you can always get them to open a 12 month fixed term account with no access within that time, so it will take them months to get their hands on the money


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 

Or multi year state savings (I know they can be broken but at least not sitting in their current account).

We are fortunate that ours have always been pretty sensible - and they are a bit older at this stage
 
EmmDee said:
Or multi year state savings (I know they can be broken but at least not sitting in their current account).

We are fortunate that ours have always been pretty sensible - and they are a bit older at this stage
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That's the trick. In 1st year of college, my dad availed of a covenant to claim tax relief on college fees (they were abolished the following year). I had to have my college fees sitting in my current account; half of which was paid in September and the following half in January. I did dip into it but not by much and I knew I was working full time over Christmas and could pay it back. A friend of a friend went through the whole lot! I'd imagine it was a pretty uncomfortable conversation with his parents.
 
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