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Tax on a gift

  • 02-01-2017 10:39pm
    #1
    Spr1ngsteen
    Registered Users, Registered Users 2 Posts: 52 ✭✭


    Hi there,

    Not sure if the correct place to post (feel free to move if so)

    I am currently in the process of building a house. Work has started, mortgage approved etc, but my uncle has offered me a large lump sum (100k). He says I can repay this, interest free, over the next how many years (no rush) to give us a helping hand. Very kind :)

    If we used this as a payment towards our mortgage we could stand to save a lot on interest.

    Is this something we could accept without being taxed a huge amount? Obviously we don't want to accept the gift, have to repay my uncle the full amount, but only receive half of the money!

    I'm clueless on this sort of stuff, so don't know if it is a good idea to accept his offer or what is the best way to proceed. I don't want to do anything illegal, so am not necessarily looking for a 'way around' the system - just wondering what the best course of action for me to take is

    Any advice appreciated, or if anyone has any contacts who specialize in this sort of thing, please recommend

    Thanks all


Comments

  • #2
    ytpe2r5bxkn0c1
    Closed Accounts Posts: 32,688 ✭✭✭✭ytpe2r5bxkn0c1


    As I understand it CAT is due on gifts from an Uncle over €32500, at 33%. That's €22,275.

    Edit. http://www.revenue.ie/en/tax/cat/thresholds.html


  • #3
    SixSixSix
    Registered Users, Registered Users 2 Posts: 50 ✭✭SixSixSix


    Spr1ngsteen wrote: »
    ...my uncle has offered me a large lump sum (100k). He says I can repay this, interest free, over the next how many years (no rush)...

    Is it a gift or a loan?


  • #4
    thegolfer
    Registered Users, Registered Users 2 Posts: 346 ✭✭thegolfer


    http://www.revenue.ie/en/tax/cat/guide/free-property-loans.html


    What is described is an interest free use of property or money. A loan.

    It is taxable, but only the deemed interest amount, which is computed against the rate of interest your uncle would get if put in deposit, in the example say 1.5% , so if €100,000 loan is advanced then annual gift is €1,500.

    You have an annual tax free gift amount of €3,000.

    If the loan if forgiven and your uncle gifts the lot to you then the outstanding loan is a taxable in your hands.

    You and your uncle fall into Group B thresholds for Capital Acquisitions Tax purposes.

    I would get a loan document drawn up, protecting both you and your uncle, setting out the details and repayment terms etc.


  • #5
    Mr. Incognito
    Registered Users, Registered Users 2 Posts: 9,798 ✭✭✭Mr. Incognito


    Make sure the loan is documented.

    The Annual Exemption will probably cover the interest portion


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