Gift money

Phil1969

Hi Guys,

My wife's father died a few months ago, and her Mum can no longer take care of their farm (her Mam lives in Asia), as it is just too big for her too run.

Anyway, my mother-in-law is talking about selling off a lot of her farmland and sharing the money from the sale with her children. I am not sure how much this is likely to be but the amount could be somewhere around 50k euros for each child. I would imagine it would take quite sometime to sell off, as there is a lot of it, so the money is not likely to come in one go.

My question is, what are the rules on this, it is not actually inheritance as my wife's mother is still alive so was wandering what are the laws regarding gift money. And, I read somewhere that it could be taxed heavily.

Thanks in advance for any advice.

Mrs OBumble

Phil1969 wrote: »

(her Mam lives in Asia

That's a big area, Asia. Lots of countries in it, each with their own different laws. Probably some have dual tax treaties with Ireland, and some don't.

So the first thing is to find out about the local laws there, and then Ireland's tax treaty status.

Then research Ireland's inheritance laws ...

Phil1969

Mrs OBumble wrote: »

That's a big area, Asia. Lots of countries in it, each with their own different laws. Probably some have dual tax treaties with Ireland, and some don't.

So the first thing is to find out about the local laws there, and then Ireland's tax treaty status.

Then research Ireland's inheritance laws ...

Thanks Mrs OBumble for the advice. They have no dual tax treaties with Ireland so I think it is more about whether or not it would be taxed coming into Ireland. I have done a little research but I am not so clear on it, I will do some more and see what I can find out. Thanks

cruizer101

Gifts to children are counted the same as inheritance. So let's say inheritance limit is 100k (can't remember what it actually is but that's kinda ballpark) if she gifts 50k then when she dies anything over 50k will be taxed. Think of it as a lifetime allowance that can be spread over gifts or inheritance.

Also there is a 3k (again check this figure I'm not sure) exemption per year. So she can gift 3k per year to you all and it does not count towards allowance.

Phil1969

cruizer101 wrote: »

Gifts to children are counted the same as inheritance. So let's say inheritance limit is 100k (can't remember what it actually is but that's kinda ballpark) if she gifts 50k then when she dies anything over 50k will be taxed. Think of it as a lifetime allowance that can be spread over gifts or inheritance.

Also there is a 3k (again check this figure I'm not sure) exemption per year. So she can gift 3k per year to you all and it does not count towards allowance.

Thanks cruizer101, that is good to know.

Victor

http://www.revenue.ie/en/gains-gifts-and-inheritance/gift-and-inheritance-tax-cat/index.aspx

davindub

Phil1969 wrote: »

Hi Guys,

My wife's father died a few months ago, and her Mum can no longer take care of their farm (her Mam lives in Asia), as it is just too big for her too run.

Anyway, my mother-in-law is talking about selling off a lot of her farmland and sharing the money from the sale with her children. I am not sure how much this is likely to be but the amount could be somewhere around 50k euros for each child. I would imagine it would take quite sometime to sell off, as there is a lot of it, so the money is not likely to come in one go.

My question is, what are the rules on this, it is not actually inheritance as my wife's mother is still alive so was wandering what are the laws regarding gift money. And, I read somewhere that it could be taxed heavily.

Thanks in advance for any advice.

The gift threshold is 310k tax free, it will be well within the threshold, but where the issue will arise is any gain on the sale of the land, most jurisdictions have capital gains tax, so it would be worth engaging a tax adviser in the home country, while she is alive you have time to plan out the transfer.

Phil1969

davindub wrote: »

The gift threshold is 310k tax free, it will be well within the threshold, but where the issue will arise is any gain on the sale of the land, most jurisdictions have capital gains tax, so it would be worth engaging a tax adviser in the home country, while she is alive you have time to plan out the transfer.

Thanks davindub for the information. My wfe's Mum would be sorting the tax out from the sale, although I know there are limits on what money can be taken out of the country so I will need to check that out. I have also read somewhere that the parent needs to write a letter to say that the money has been gifted to the child and it is not a loan? I presume something is required to show where money is coming from.

Thanks

Victor

Phil1969 wrote: »

I have also read somewhere that the parent needs to write a letter to say that the money has been gifted to the child and it is not a loan?

This would be required by the bank when obtaining a mortgage, to stop people pretending a parental loan is a gift and people exceeding a prudent borrowing limit.

For anti-money laundering reasons, your bank will want an explanation ("It's a gift from my mother"). If Revenue ask questions, then having the letter would be useful, but not mandatory.

Phil1969

Thanks Victor, that is good to know. I was not sure if they required some paper work to prove money was not being laundered but you have put my mind at rest with your reply.

Thanks Phil