CAT on money gift from sister

MsTea

Hi,
I am currently trying to take a joint mortgage into my own name as I am separating from my ex. The remaining mortgage is too high for me to afford on my own. My sister and her husband have offered to gift me £50K, which along with my own savings would be enough to bring the mortgage down to an affordable level. My question is, how do I accept this without having to pay CAT? I looked at the thresholds for gifts and this falls into Group B, as the disponer is a sibling. The limit for Group B is €32,500. Obviously this does not cover the full amount of the gift. Should I simply say nothing and hope for the best? Or, could my sister gift £25k to me and £25K to my mother, who could then legally gift it to me without me incurring CAT. What would you do?
Thanks,
MsTea

Lockedout2

Your sister and her husband so €35k from her and €15k from him is €32k taxable from her under threshold and €12k from him.

MsTea

Hi Lockedout2
I don't quite get your maths. The CAT Threshold for Group B is €32,500 so my sister couldn't give me €35K without me incurring tax on the excess €2,500. Didn't think of my BIL be able to gift me separately, thanks. Also, they're giving me Sterling £50K, so about €58K at today's exchange rate. If I include my BIL giving me the max for threshold for Group c, then he could give me €16,250 and she could give me €32,500 bringing the total to €48,750, which is almost €10K short of what I need.

Lockedout2

The first €3,000 per gift per person per annum is exempt.

MsTea

Maybe I'm being thick, but I don't follow you. Are you saying I should take the maximum of the threshold PLUS €3,000? So, 35,500 from my sister (€32,500 threshold group B limit plus €3,000) and €19,250 from my BIL (€16,250 group C threshold limit plus €3,000)??? Still slightly short but not by much.

CIARAN_BOYLE

MsTea wrote: »

Maybe I'm being thick, but I don't follow you. Are you saying I should take the maximum of the threshold PLUS €3,000? So, 35,500 from my sister (€32,500 threshold group B limit plus €3,000) and €19,250 from my BIL (€16,250 group C threshold limit plus €3,000)??? Still slightly short but not by much.

€3000 per year from each person is a small gift exemption only after that do you begin to go against your life time gift threshold.

MsTea

Thanks Ciaran, so are my sums correct in the my last post do you think? If I took €35,500 from my sister and €19,250 from my BIL I would not be liable for CAT?

CIARAN_BOYLE

MsTea wrote: »

Thanks Ciaran, so are my sums correct in the my last post do you think? If I took €35,500 from my sister and €19,250 from my BIL I would not be liable for CAT?

yep.

Be aware though that while not relevant you would still need to file an appropriate declaration with Revenue and you will never be able to get a gift (greater than €3k) from a category b or c individual again without paying tax

Sleeper12

MsTea wrote:

Hi Lockedout2 I don't quite get your maths. The CAT Threshold for Group B is €32,500 so my sister couldn't give me €35K without me incurring tax on the excess €2,500. Didn't think of my BIL be able to gift me separately, thanks. Also, they're giving me Sterling £50K, so about €58K at today's exchange rate. If I include my BIL giving me the max for threshold for Group c, then he could give me €16,250 and she could give me €32,500 bringing the total to €48,750, which is almost €10K short of what I need.

Pity they didn't gift 3k each in Dec 2016. This would have been tax free I think

MsTea

CIARAN_BOYLE wrote: »

yep.

Be aware though that while not relevant you would still need to file an appropriate declaration with Revenue and you will never be able to get a gift (greater than €3k) from a category b or c individual again without paying tax

That's very clear, thanks Ciaran.

MsTea

Sleeper12 wrote: »

Pity they didn't gift 3k each in Dec 2016. This would have been tax free I think

Yep. Hindsight is a great thing...

henryd65

Sleeper12 wrote: »

Pity they didn't gift 3k each in Dec 2016. This would have been tax free I think

Just on this, if one was to receive a cheque for 3k dated Dec. 2016 but not cash it until 2017, can you receive another tax free cheque for 3k from the same person in 2017 ?

Spanish Eyes

You can take a gift to the maximum of Class B + 3k which is exempt for a gift, and the maximum from Class C, plus 3k.

Does that bring you under the threshold for the 50K? Haven't time to look it up on Rev.ie.

Sleeper12

henryd65 wrote:

Just on this, if one was to receive a cheque for 3k dated Dec. 2016 but not cash it until 2017, can you receive another tax free cheque for 3k from the same person in 2017 ?

I'd imagine it's based on the date that the cheque is lodged. Getting 3k cash on Dec 31st & lodging in the bank in January would be different though.
Hindsight

Spanish Eyes

And BTW gift splitting is not an option. You mentioned a gift to you and your mother who would then gift it to you. Nope. Deemed to come from the original donor if done within three years. Last time I looked anyway!

Bandana boy

Get a gift of 32k and a loan of 18K
Next year get a gift of 18K to pay of the loan

CIARAN_BOYLE

Bandana boy wrote: »

Get a gift of 32k and a loan of 18K
Next year get a gift of 18K to pay of the loan

Apart from the €3k which is an annual small gift exemption the thresholds are lifetime.

Please don't throw ignorant and clearly wrong tax advice out on this forum.

MsTea

Spanish Eyes wrote: »

And BTW gift splitting is not an option. You mentioned a gift to you and your mother who would then gift it to you. Nope. Deemed to come from the original donor if done within three years. Last time I looked anyway!

Thanks Spanish Eyes, good to know.

Bandana boy

CIARAN_BOYLE wrote: »

Apart from the €3k which is an annual small gift exemption the thresholds are lifetime.

Please don't throw ignorant and clearly wrong tax advice out on this forum.

Oops did not know that
Maybe rent her a room in your house for 14K a year

barneystinson

Bandana boy wrote: »

Oops did not know that
Maybe rent her a room in your house for 14K a year

Yeah that would definitely work :rolleyes:

scheister

Would an idea be get a interest free loan for the sister and her husband to cover the £50k. Then they write off €2,500 each as a year as a gift. im going lower then full gift exemption of €3k to allow for the gift of the "deemed interest" on the loan.