Loan Gift tax?

fatalll

Hi,
I want to give a member of my family some money circa 40k as a loan.

Can this be done?
do I have to pay gift tax...what are the implications for me and her?
thanks

barneystinson

fatalll wrote: »

Hi,
I want to give a member of my family some money circa 40k as a loan.

Can this be done?
do I have to pay gift tax...what are the implications for me and her?
thanks

Well is it a loan or a gift?

If its a loan it's not a gift!

fatalll

loan.
I just don't want to wind up paying tax on it as Ive already payed tax on it from my wages.
Its a loan that may be payed back eventually

adrianw

Is there any interest being charged?
If there is no interest being charged, Revenue will deem the interest free benefit to be a gift to the individual receiving the money.
If we assume a bank would normally look for 10%, there will be a deemed gift of €4,000 euro a year.
There is a annual allowance of €3,000 per year. Therefore this would be slightly over the threshold.
However, if the cash is coming from a joint account and being given to a child for a house deposit for example, both parents can give €3,000 a year, therefore increasing the allowable deemed interest amount to €6,000.
You should set up a loan agreement, just to avoid potential confusion in later years.

fatalll

adrianw wrote: »

Is there any interest being charged?
If there is no interest being charged, Revenue will deem the interest free benefit to be a gift to the individual receiving the money.
If we assume a bank would normally look for 10%, there will be a deemed gift of €4,000 euro a year.
There is a annual allowance of €3,000 per year. Therefore this would be slightly over the threshold.
However, if the cash is coming from a joint account and being given to a child for a house deposit for example, both parents can give €3,000 a year, therefore increasing the allowable deemed interest amount to €6,000.
You should set up a loan agreement, just to avoid potential confusion in later years.

Thanks
So Can I draw up a loan agreement myself over any amount of years with a interest rate of ecb interest rate?
Just get both of us to sign or does the agreement have to go to some government agency?

ted1

fatalll wrote: »

loan.
I just don't want to wind up paying tax on it as Ive already payed tax on it from my wages.
Its a loan that may be payed back eventually

If your giving the loan, you won't have to pay any Tax


If your giving it as a loan for a deposit, then the bank will need you to sign a letter saying it is a gift and you will not be seeking repayment.

Of its a loan , the letter needs to say as much and then they will reduce their offer on the basis that they have an outstanding loan

fatalll

ted1 wrote: »

If your giving the loan, you won't have to pay any Tax


If your giving it as a loan for a deposit, then the bank will need you to sign a letter saying it is a gift and you will not be seeking repayment.

Of its a loan , the letter needs to say as much and then they will reduce their offer on the basis that they have an outstanding loan

Thanks Ted1