Brother Lending Me Money

Jonny303

Hi,
Small question. My brother is lending me 30k for my mortgage.

Would I be right in saying that he can give me this tax free as a gift as it will still be under the threshold.

Also if I pay him back €3000 (gift) a year for 10 years, this won't affect the threshold of my giving him future gifts as you can gift someone 3000 a year without affecting the threshold or have o got that wrong.

Thanks

scheister

Jonny303 wrote: »

Hi,
Small question. My brother is lending me 30k for my mortgage.

Would I be right in saying that he can give me this tax free as a gift as it will still be under the threshold.

Also if I pay him back €3000 (gift) a year for 10 years, this won't affect the threshold of my giving him future gifts as you can gift someone 3000 a year without affecting the threshold or have o got that wrong.

Thanks

If you are getting a gift for a mortgage you will be made sign something to this effect. while unlikely the bank may see the amounts going to him once once a year for 3k and ask questions.

If the brother lends you 30k as a gift this will also use up a lot of your threshold that is tax free for that class.

But at a high level you can gift him 3k a year with out his threshold being effected.

Widdensushi

It sounds like a loan and could be treated as such without affecting the threshold

Calahonda52

Jonny303 wrote: »

Hi,
Small question. My brother is lending me 30k for my mortgage.

Would I be right in saying that he can give me this tax free as a gift as it will still be under the threshold.

Also if I pay him back €3000 (gift) a year for 10 years, this won't affect the threshold of my giving him future gifts as you can gift someone 3000 a year without affecting the threshold or have o got that wrong.

Thanks

A loan, properly documented, is not a gift.

seamus

Strictly speaking you are correct. It would mean that any future gifts your brother gave to you over €3k would become subject to CAT.

The bank for its part will want a notarised/witnessed declaration from your brother that the €30k is a gift given without expectation of repayment and he waives all interest in the house either now or in the future.

It's worth noting that Revenue are free to disagree with your treatment of the funds. If they decide that the €30k actually constitutes a tax-free loan, then it may see fit to tax you based on the intangible benefit (i.e. the interest you didn't pay). The declaration that it's a gift is for them somewhat irrelevant, they can choose to treat it as a loan if it looks like a loan.

scheister

Widdensushi wrote: »

It sounds like a loan and could be treated as such without affecting the threshold

Calahonda52 wrote: »

A loan, properly documented, is not a gift.

Main issue is calling it a loan will effect the mortgage he will get as it is another outgoing that has to be considered into his repayment capacity

Jonny303

Sorry should have mentioned, the mortgage isnt a problem. I have the mortgage a few years, it's just to put a lump sum off of it.