Allowed amount towards Gift for buying house

iwantthat

Hi

Does anyone know what maximum amount is acceptable as gift when applying for mortgage.

We want to buy house and are saving but no where near a good deposit. With the prices rising day by day, we have asked family to help out. They have agreed but don't know legislations.

Also at what stage we have to have all the money in bank resulting from gifts. Can I go to bank to apply for mortgage with the letters only initially or do I need to have the money in bank first.

exaisle

Do you mean from the point of view of Capital Acquisitions Tax? Obviously, people can give whatever they like as a gift but certain gifts can attract the attention of the taxman.

Parents can give their children a gift of up to €310,000 and this figure is €32,500 for certain other family members*, without the recipient incurring a Capital Acquisitions Tax liability.

The first €3,000 of any gift received each year is not taken into account.

*Take a look here:
http://www.revenue.ie/en/tax/cat/index.html

Edit: I suspect that you are more interested in the practicalities of the gifts actually having been received.
However, you might just check that you don't incur a CGT liability just in case.

iwantthat

I wish that family was able to give so much... 

The situation is that my sister and brother has agreed to give me 10k each. My father in law is giving 15k.

I want to use this towards the deposit of the house and apply for mortgage.

Now, does the tax man, would they tax on the gifted money collectively or would look at each gift individually.

Would bank have any problem with gifted money being used as deposit.

Money won't be transferred to me for another few weeks. So should i go to bank after or can go with the letters now.

Kristopherus

iwantthat wrote: »

I wish that family was able to give so much...

The situation is that my sister and brother has agreed to give me 10k each. My father in law is giving 15k.

I want to use this towards the deposit of the house and apply for mortgage.

Now, does the tax man, would they tax on the gifted money collectively or would look at each gift individually.

Does bank would have any problem with gifted money being used as deposit.

Do Revenue & Bank need to know the source of your deposit? If you lodge €5k or more in one go, you will have to explain where it came from. Better to make smaller deposits over a longer period of time.

Millem

iwantthat wrote: »

Hi

Does anyone know what maximum amount is acceptable as gift when applying for mortgage.

We want to buy house and are saving but no where near a good deposit. With the prices rising day by day, we have asked family to help out. They have agreed but don't know legislations.

Also at what stage we have to have all the money in bank resulting from gifts. Can I go to bank to apply for mortgage with the letters only initially or do I need to have the money in bank first.

The bank will want the family members to sign a letter saying the money is not a loan and they have no claim on the house.
We didn't need to have the money in our bank accounts for aib. My parents are aib too though so maybe they could see the money was there? Our gifts probably amounted to half our deposit.

iwantthat

iwantthat wrote: »

I wish that family was able to give so much... 

The situation is that my sister and brother has agreed to give me 10k each. My father in law is giving 15k.

I want to use this towards the deposit of the house and apply for mortgage.

Now, does the tax man, would they tax on the gifted money collectively or would look at each gift individually.

I will give you a rough run down on how it works from a tax perspective (though you should of course seek professional advice if you are unsure of anything) but one question first, are you buying jointly with your wife?

Kristopherus wrote: »

Do Revenue & Bank need to know the source of your deposit? If you lodge €5k or more in one go, you will have to explain where it came from. Better to make smaller deposits over a longer period of time.

If its a money transfer from an account or cheque then they won't ask for anything, if its a large some of cash it might raise some questions.

iwantthat

I am buying jointly. It will be 3 transfers from bank accounts. I will get the letters signed saying they are gifts.

Victor

That you have to use large gifts towards much of your deposit will affect you under the saving ability criteria that the banks use.

iwantthat wrote: »

The situation is that my sister and brother has agreed to give me 10k each. My father in law is giving 15k.

Now, does the tax man, would they tax on the gifted money collectively or would look at each gift individually.

Revenue look at the person receiving the gift, not the donor - it's a Capital Acquisitions Tax, not a gift tax.

Assuming you are married, your father in law counts as a parent.

You expect to receive €35,000. €3,000 of this is ignored. €20,000 is from siblings and €15,000 is from a parent. This means that none of the limits are exceeded, but part of hte limits are used up.

iwantthat

Thank you for your detailed reply. The thing is I am not expecting to mooch more money off the family... So using part of the limit isn't a problem.

In terms of savings, I will be honest, I have no other purpose of the gifts and i don't have much deposit saved up. We both are working. Myself at 45k and herself at 20k. Given the sharp incline in house prices i feel we are going to miss the window of affordability. So i want to act now.

Now I am hoping bank will go easy on us if not then sure what's the harm in trying.

Millem

iwantthat wrote: »

Thank you for your detailed reply. The thing is I am not expecting to mooch more money off the family... So using part of the limit isn't a problem.

In terms of savings, I will be honest, I have no other purpose of the gifts and i don't have much deposit saved up. We both are working. Myself at 45k and herself at 20k. Given the sharp incline in house prices i feel we are going to miss the window of affordability. So i want to act now.

Now I am hoping bank will go easy on us if not then sure what's the harm in trying.

Your salary is €45k or you have saved €45k?
I think banks would want you to have saved a chunk if your deposit yôurself. Have you been paying rent so you can show repayment capacity?
Sure apply anyway!! We only applied to aib as that's who we bank with and tbh found it so handy that we didn't need bank statements!

iwantthat

My salary is 45k per annum and my Mrs is on 20k per annum.
I have saving of 2k. I want to use gift towards deposit.
I am renting and paying 1600euros a month.

thejourney

iwantthat wrote: »

My salary is 45k per annum and my Mrs is on 20k per annum.
I have saving of 2k. I want to use gift towards deposit.
I am renting and paying 1600euros a month.

Ok, So take pay 2000 per month for loan. 200,000 loan should buy you a house/apartment.

That means in 10 years you'll own your house, No point paying for anyones loan.

So 40,000 deposit should be enough to get loan

syndrome777

iwantthat wrote: »

My salary is 45k per annum and my Mrs is on 20k per annum.
I have saving of 2k. I want to use gift towards deposit.
I am renting and paying 1600euros a month.

banks want to 6 months continuous savings at the level your mortgage repayments would be. (that's the least they want if you didn't save all 10% of your property value yourselves)

iwantthat

syndrome777 wrote: »

banks want to 6 months continuous savings at the level your mortgage repayments would be. (that's the least they want if you didn't save all 10% of your property value yourselves)

I am a first time buyer.
I am renting from last 8 months at a rate of 1600euros. and before that i was living in galway and paying 835euros per months.

iwantthat

thejourney wrote: »

Ok, So take pay 2000 per month for loan. 200,000 loan should buy you a house/apartment.

That means in 10 years you'll own your house, No point paying for anyones loan.

So 40,000 deposit should be enough to get loan

I think so too however i am concerned about 100% deposit from gift money.

syndrome777

iwantthat wrote: »

I am a first time buyer.
I am renting from last 8 months at a rate of 1600euros. and before that i was living in galway and paying 835euros per months.

I don't want to discourage you, but I was recently mortgage approved and a lot of people I know were to and all of us had to show regular savings. I was paying rent of €1000 and I also saved €1000, they counted all of this as my repayment capacity.

Maybe there are people here who were mort approved with only gift mony used as deposit.

iwantthat

syndrome777 wrote: »

I don't want to discourage you, but I was recently mortgage approved and a lot of people I know were to and all of us had to show regular savings. I was paying rent of €1000 and I also saved €1000, they counted all of this as my repayment capacity.

Maybe there are people here who were mort approved with only gift mony used as deposit.

I am really thankful for replies from all of you and really appreciate input from each and everyone, even if it is bad news. After all we are all here to share and learn.

In terms of saving, it is my 3rd month when i've put aside a 1000euros in a saving account. So lets see what bank will say.

myshirt

You will get a mortgage for about 230-240 from the bank, plus your 35. You can buy for 260-270 and have enough for solicitor fees etc.

1,600 a month is enough to demonstrate repayment capacity on that loan over 30years.

You're doing good here. Very lucky to get those gifts. As others were saying, it is critical that they sign away any right to claim that money back. You don't want to be paying them on the side or anything like that either. It has to be a pure gift.

syndrome777

iwantthat wrote: »

I am really thankful for replies from all of you and really appreciate input from each and everyone, even if it is bad news. After all we are all here to share and learn.

In terms of saving, it is my 3rd month when i've put aside a 1000euros in a saving account. So lets see what bank will say.

that's very good then.
If you have time, you should really sit down with a mortgage adviser and discuss all of this. If you show 6 months of €1K and all those gift funds for deposit, I think that will be enough.

iwantthat

iwantthat wrote: »

I am buying jointly. It will be 3 transfers from bank accounts. I will get the letters signed saying they are gifts.

As I said you would really need to talk to a tax advisor as the absolute best way to structure this as it should be possible to do it with minimal loss of tax free threasholds. You won't even come close to having to pay gift tax.

Ok so you have 3 transfers, 2x10k and 15k from your FIL. Have the money transferred into a joint account with your wife in that way you each get 3k per person exempt. In other words 10k from you brother = 6k exempt so only 4K taken from your 32500 group b threshold. Same from your sister 6k exempt for small gift exemption so only another 4k taken from the 32500 lifetime threasholds.

Again the father in laws gift Will be first 6k exempt on the small gift exemption and the remaining 9k should come of your wives parent to child group A threashold of 310,000. This is roughly how it could be structured but an expert will give the finer details.

iwantthat

Beau Zealous Millipede wrote: »

As I said you would really need to talk to a tax advisor as the absolute best way to structure this as it should be possible to do it with minimal loss of tax free threasholds. You won't even come close to having to pay gift tax.

Ok so you have 3 transfers, 2x10k and 15k from your FIL. Have the money transferred into a joint account with your wife in that way you each get 3k per person exempt. In other words 10k from you brother = 6k exempt so only 4K taken from your 32500 group b threshold. Same from your sister 6k exempt for small gift exemption so only another 4k taken from the 32500 lifetime threasholds.

Again the father in laws gift Will be first 6k exempt on the small gift exemption and the remaining 9k should come of your wives parent to child group A threashold of 310,000. This is roughly how it could be structured but an expert will give the finer details.

Thank you very much for your advice and the helpful info.

iwantthat

Thank you everyone. Really appreciate input from ye all.