Selling shares and cash gift

devilabit

Lets say a parent wanted to help a child to buy a house by selling some shares which they would then give as a gift to the child.

My question is would the gift be taxable under Capital Acquisition Tax at 25%?

swanvill

Hi a gift from a parent to child is taxable. The tax is calculated as follows for 2011
The first €332,048 (need to double check the threshold) is exempt and the balance is taxed at 25%, so I presume their will not be a tax liability as it will be covered by the exempt threshold of €332k, if it is not covered by the threshold can I offer myself up to you for adoption :-).

You should also bear in mind if you sell the shares at a profit, there will be capital gains tax to be paid. You will be exempt on the €1,270 of profit and then the balance will be taxed at 25%.

As usual this advice is based on the info supplied (and is only supplied for educational purposes and does not recomend a course of action) and for all capital taxes (gift & capital gains) you should hire an accountant to review your suggested transaction before embarking on any gift/sales of shares. You
could also review the revenue website and it's leaflets or talk to the tax office
If you want some more information.

Pandoras Twist

I'm not certain, but giving the shares to the child as a gift and allowing them to sell them may work out better for you.

First €414,799 will be tax free (but this will be added to any other gifts or inheritances the child may get from you and others in the same category as you, so over time this adds up and they may eventually pay tax on an inheritance or gift)

Then there is €3,000 gift exemption which will reduce the value of the gift that you give by €3,000

The child will receive the shares at market value, and then if they sell them immediately they may not incur CGT.

Open to correction on this

devilabit

Pandoras Twist wrote: »

I'm not certain, but giving the shares to the child as a gift and allowing them to sell them may work out better for you.

First €414,799 will be tax free (but this will be added to any other gifts or inheritances the child may get from you and others in the same category as you, so over time this adds up and they may eventually pay tax on an inheritance or gift)

Then there is €3,000 gift exemption which will reduce the value of the gift that you give by €3,000

The child will receive the shares at market value, and then if they sell them immediately they may not incur CGT.

Open to correction on this

From what I have read this would not work, regardless of whether the shares were transferred to the child or the shares were sold and then the money given to the child, the parent would be subject to capital gains tax at 25%.

seco

I agree - even if shares are gifted to child, my understanding is that there would be a CGT liability based on market value of shares at date of gift, less price paid to acquire shares, less exemption €1270, leaving balance taxable @ 25%

barneystinson

devilabit wrote: »

From what I have read this would not work, regardless of whether the shares were transferred to the child or the shares were sold and then the money given to the child, the parent would be subject to capital gains tax at 25%.

Just gonna throw it out there - do you have any bank shares etc.. (or other shares that you've given up hope on!) that you can sell at a capital loss to reduce the chargeable gain?

devilabit

barneystinson wrote: »

Just gonna throw it out there - do you have any bank shares etc.. (or other shares that you've given up hope on!) that you can sell at a capital loss to reduce the chargeable gain?

Yes that's actually a possibility although the loss wont reduce the net value of the gain by much.

Mr. Incognito

There is a specific CAT exemption for this.

If you want to know what it is go hire a professional.

No more half guesses from the audience please.

This borders on property advice which as you already know is banned.

If someone wants to provide me and Boards with an Insurance indemnity I'll reopen the thread and they can respond.

In short this is specific tax advice and not allowed here.