Rate of notional interest on loan?

carveone

The Irish Times today has an article on "loaning son money to buy house" (linky). One of paragraphs is about the interest on such a loan as far as Revenue is concerned:

As long as the intention is that the loan is repaid as you outline, it will not, in itself, be deemed a gift. But a loan, in general, carries an interest charge – as, for instance, a mortgage would if your son was able to secure one. If your son is only repaying the loan with no allowance for interest, the “notional” interest that would be charged on such borrowings will itself be seen as a gift from you to him.

The question is - what would Revenue see as a reasonable allowance for interest? Do they have some number in mind other than zero? The reason I'm asking is that the current ECB rate is 0.05% - as close to zero as makes no odds. But somehow I feel Revenue would have something else in mind but I cannot see if they tell us anywhere!

Valetta

I would have thought half way between the lowest mortgage rate available on the market and the highest deposit rate available would be acceptable.

Once it's seen to be fair then revenue won't have a problem.