Tax implications of assisting daughter with house purchase.

Kinsailor

Our daughter is considering buying a house and my wife and I would like to help her with the deposit without dipping into the lifetime CAT allowance for parent to child transfer. We have two questions:
1) Is the annual €3000 exemption applicable per parent (where one has elected for dual taxation ) ?
      -  If not - Would changing to single assessment change things ?
2) If we have a mechanism for formalising a loan to her with her paying interest to us (when we may have to pay normal income tax on that income) - Are there any CAT implications for such an arrangement ? 

Thank you for any feedback (and any other ideas as to how we can assist my daughter and not pay penal transfer tax rates).

thegolfer

Your daughter can take multiple gifts of €3000 annually, from different persons, and is not taken into account for tax purposes. This being the small gift exemption.

The loan, outright is not a gift, and as such directly not taxable, but will have a free use of cash attaching to it, which is taxable. The free use of the money say €100000, will have a deemed rate of interest applied annually, at 31/12 each year. The rate applied would be a deposit rate say 1%, and the forgone interest is deemed a gift to your daughter. Being €1000 is under the small gift exemption, as above.

If you did charge her interest, that would be taxable in your hands, depending on your income possible up to 52%, your daughter may also have to deduct withholding tax also, and pay over to Revenue.

Kinsailor

That is very helpful thank you : 
I dont completely follow the  calculation foregone interest term  of €1000 mentioned  in the example above :  I had read it as €100k x ( (31/12%)-1%) = €1583

Is there a particular revenue notice/guidance document that covers the 'free use of cash concept'  and the principle of Net Interest (ie actual - foregone interest) 

Thank you again

Kinsailor

That is very helpful thank you : 
I dont completely follow the  calculation foregone interest term  of €1000 mentioned  in the example above :  I had read it as €100k x ( (31/12%)-1%) = €1583

Is there a particular revenue notice/guidance document that covers the 'free use of cash concept'  and the principle of Net Interest (ie actual - foregone interest) 

Thank you again

thegolfer

By 31/12, I mean 31st December annually as the date to calcate the interest.

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

Details above from Revenue