How much can you give without paying tax?

Bubblesss

Hi. I was woundering if anyone could help me with a question. My fiancé has a loan of €7,000 that he wants to get rid of. He's got €3,000 saved and I've €4,000 saved. Obviously being the new year at the end of the week we were hoping to start the new year with no loans and then save more to further on the process of saving for a house

What is the max amount you can lend to a person before we have to pay tax? How much can someone send to another person before we have to pay tax? Bearing in mind this isn't a loan exactly as I have no plans to ask for this back. It's just so we both can be loan free and save more and hopefully go for a mortage with no loans on our backs


Cheers?

kjgf123

I belive its €3,000 each year.

https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-exemptions/small-gift-exemption/index.aspx

Bubblesss

kjgf123 wrote: »

I belive its €3,000 each year.

[]

Could I give €3,000 today for an example and €1,000 say next Monday considering its a New Year?

capefear

Bubblesss wrote: »

Could I give €3,000 today for an example and €1,000 say next Monday considering its a New Year?

Yep you can give 3k in 2020 and 1k in 2021. It’s capped at 3k a year

SpacialNeeds

Wait exchanging money with your spouse is taxable???

What if I send my wife 15000 over the course of the year to pay bills and rent we jointly owe, is that regarded as taxable?

I'm learning all sorts of ways the government gets to interfere in decent people's lives today.

blackbox

SpacialNeeds wrote: »

Wait exchanging money with your spouse is taxable???

What if I send my wife 15000 over the course of the year to pay bills and rent we jointly owe, is that regarded as taxable?

I'm learning all sorts of ways the government gets to interfere in decent people's lives today.

OP said fiancee, not spouse.

Atlantic Dawn

SpacialNeeds wrote: »

Wait exchanging money with your spouse is taxable???

What if I send my wife 15000 over the course of the year to pay bills and rent we jointly owe, is that regarded as taxable?

I'm learning all sorts of ways the government gets to interfere in decent people's lives today.

Spouse is unlimited.

SpacialNeeds

Apologies, i missed the fiancé part.

What about couples who have cohabited for say ten years?

Just curious.

HBC08

Bubblesss wrote: »

Hi. I was woundering if anyone could help me with a question. My fiancé has a loan of €7,000 that he wants to get rid of. He's got €3,000 saved and I've €4,000 saved. Obviously being the new year at the end of the week we were hoping to start the new year with no loans and then save more to further on the process of saving for a house

What is the max amount you can lend to a person before we have to pay tax? How much can someone send to another person before we have to pay tax? Bearing in mind this isn't a loan exactly as I have no plans to ask for this back. It's just so we both can be loan free and save more and hopefully go for a mortage with no loans on our backs


Cheers?

It's capped at 3k per year.
A simple solution would be give it to him in cash (or a portion of it for example €1000)
I know a friend whos mother put €100 a week into his account for about 8 years,that's €5200 per year.Neither of them had a breeze there was any tax liability and nothing was ever said

Seve OB

HBC08 wrote: »

It's capped at 3k per year.
A simple solution would be give it to him in cash (or a portion of it for example €1000)
I know a friend whos mother put €100 a week into his account for about 8 years,that's €5200 per year.Neither of them had a breeze there was any tax liability and nothing was ever said

Ignorance is not a valid excuse if and when caught.

Seve OB

SpacialNeeds wrote: »

Apologies, i missed the fiancé part.

What about couples who have cohabited for say ten years?

Just curious.

Then you are just friends. €3k limit applies

Edit. That’s a gift amount.
In your case above, you were paying bills that you owe. So not the same

HBC08

Seve OB wrote: »

Ignorance is not a valid excuse if and when caught.

I realise this,my point was it was there in black and white,one account to another for years and nobody took any notice.I imagine it might be bigger sums they go after than in the example I gave and the op.

Yellow_Fern

Seve OB wrote: »

Then you are just friends. €3k limit applies

Edit. That’s a gift amount.
In your case above, you were paying bills that you owe. So not the same

I have no idea about taxation but cohabiting couples are not considered friends in other legal cases. They have a common law marriage. Their can be something like alimony since since recent legislation even with no children involved. Naturally the media mostly glossed over this.

Seve OB

HBC08 wrote: »

I realise this,my point was it was there in black and white,one account to another for years and nobody took any notice.I imagine it might be bigger sums they go after than in the example I gave and the op.

Actually as this is a mother gifting her son, the excess over the 3k per year can be treated as part of the lifetime allowance of 335k

Del2005

Yellow_Fern wrote: »

I have no idea about taxation but cohabiting couples are not considered friends in other legal cases. They have a common law marriage. Their can be something like alimony since since recent legislation even with no children involved. Naturally the media mostly glossed over this.

IIRC the law is that they have most of the responsibility of being married with none of the benefits after living together for 5 years or 2 if they have children.

So if they break up there's maintenance to be paid, but they don't have any allowances that spouses have with regards to taxes.

Mooooo

HBC08 wrote: »

It's capped at 3k per year.
A simple solution would be give it to him in cash (or a portion of it for example €1000)
I know a friend whos mother put €100 a week into his account for about 8 years,that's €5200 per year.Neither of them had a breeze there was any tax liability and nothing was ever said

Mother/ father to child has a 300+k tax free allowance

Yellow_Fern

Mooooo wrote: »

Mother/ father to child has a 300+k tax free allowance

I heard there is a loophole that many dont mention, ie. both parents can give 3,000 each. They can also give 3,000 the child's spouse. many things are exempt like education.

coylemj

Mooooo wrote: »

Mother/ father to child has a 300+k tax free allowance

It's 335K but be careful here. The €3,000 gift can be given every year with no liability to tax. The €335,000 limit of gifts from a parent you're referring to falls under Capital Acquisitions Tax and is a lifetime limit.

Whether by gift while they're alive or by way of a bequest from their will, €335,000 is the category A threshold and is the aggregate limit of how much you can take from your parents (combined) over your lifetime.

Say your father gifted you €100K in 2018, you could take that tax-free. And say he died in 2019 and left you €100K cash in his will, you can take that tax- free. Then your mother died in 2020 and left you a share of a house worth €200K. You would pay CAT (tax) on €65K of that bequest because in total, you would have received €400K from your parents, exceeding the Category A threshold of €335K.

https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-thresholds-rates-and-aggregation-rules/cat-groups-and-group-thresholds.aspx

Samuel T. Cogley

Sorry to be thick but does the €3000 yearly limit count towards the 335K limit at all?

Charles Babbage

You can lend to a person, but €3000 is the max you can give to a person.
You could lend an amount on written terms, this would either involve you receiving interest and paying tax on it or forgoing interest in which case the person with the loan would have very small tax liability, the interest rate is presumed to be deposit interest rate which is next to nothing nowadays.
https://www.revenue.ie/en/gains-gifts-and-inheritance/valuation-date-and-the-value-of-certain-benefits/free-use-of-property-and-interest-free-loans.aspx

If you get married he could write you a cheque to pay off the loan and you might not cash it.

CIARAN_BOYLE

Samuel T. Cogley wrote: »

Sorry to be thick but does the €3000 yearly limit count towards the 335K limit at all?

No it doesn't.

My old boss recommended to a client that he and his wife each give their son and his wife 3,000 a year. That was 12,000 a year without counting toward the lifetime limit.

Victor

Bubblesss wrote: »

Hi. I was woundering if anyone could help me with a question. My fiancé has a loan of €7,000 that he wants to get rid of. He's got €3,000 saved and I've €4,000 saved. Obviously being the new year at the end of the week we were hoping to start the new year with no loans and then save more to further on the process of saving for a house

I'm not sure this is an advisable course of action. It reduces your financial flexibility, removes a history of repayment and you will have no savings. Then there is the risk of him disappearing / spending the money on drugs, drink and horses. /cynic

SpacialNeeds wrote: »

What if I send my wife 15000 over the course of the year to pay bills and rent we jointly owe, is that regarded as taxable?

No, those are shared expenses, but it being your wife trumps that.

HBC08

Seve OB wrote: »

Actually as this is a mother gifting her son, the excess over the 3k per year can be treated as part of the lifetime allowance of 335k

Interesting,
So this arrangement has gone on for at least 8 consecutive years that I know of.Who would flag this up in the event of him being left a property or cash when his parents pass away?he's an only child by the way.

Claw Hammer

HBC08 wrote: »

Interesting,
So this arrangement has gone on for at least 8 consecutive years that I know of.Who would flag this up in the event of him being left a property or cash when his parents pass away?he's an only child by the way.

It will have to be declared when she dies.

tscul32

Claw Hammer wrote: »

It will have to be declared when she dies.

What if he says it was for groceries he was getting for her each week/towards fuel for him driving her around/to buy her lotto tickets or cigarettes, or a combination of the above? If nothing can be proven would revenue really come after a son who may have just been helping out his mother?

Claw Hammer

tscul32 wrote: »

What if he says it was for groceries he was getting for her each week/towards fuel for him driving her around/to buy her lotto tickets or cigarettes, or a combination of the above? If nothing can be proven would revenue really come after a son who may have just been helping out his mother?

What if the Revenue get copies of her bank statements which show that he is lying?

tscul32

Claw Hammer wrote: »

What if the Revenue get copies of her bank statements which show that he is lying?

It's just a silly hypothetical. But my parents would have transferred money to me in the past - not regularly like this - for bits and pieces I might gave picked up for them. There are no bank statements that could show that the money was not for groceries unless there is a reference on it saying "this is just a gift - not for groceries".

Zebrag

My friend was wondering this too actually. He gifted his girlfriend €3,000 towards a car in early December (Don't worry its a shared car so not entirly hers. Paying through her account as she didn't have enough to pay fully) and she herself has a loan that she wishes to pay off next year. He was planning on giving her another €3,000 towards this loan. When giving the first loan he wrote Gift as the message and in February 2021 he plans on giving her €3,000 towards this loan and will also write Gift in the message when sending to her over their banking accounts. Would these be classed as two separate years? They've looked on the revenue website when I showed them this thread and they are just concerned whether it's too close within the year to still be capped

For a simple example if someone was to give €3,000 now and €3,000 on the 1st Jan, would that be questioned or would it be classed as two separate years?

Seve OB

Zebrag wrote: »

My friend was wondering this too actually. He gifted his girlfriend €3,000 towards a car in early December (Don't worry its a shared car so not entirly hers. Paying through her account as she didn't have enough to pay fully) and she herself has a loan that she wishes to pay off next year. He was planning on giving her another €3,000 towards this loan. When giving the first loan he wrote Gift as the message and in February 2021 he plans on giving her €3,000 towards this loan and will also write Gift in the message when sending to her over their banking accounts. Would these be classed as two separate years? They've looked on the revenue website when I showed them this thread and they are just concerned whether it's too close within the year to still be capped

For a simple example if someone was to give €3,000 now and €3,000 on the 1st Jan, would that be questioned or would it be classed as two separate years?

31st December and the day after, 1st January, are in 2 separate years

Zebrag

Seve OB wrote: »

31st December and the day after, 1st January, are in 2 separate years

I told them that but of course what do I know!

Thanks for responding.

Snotty

If you receive a gift of 10k from a parent, although not taxable, should revenue be informed of the gift or is it only after the threshold is met that they need to know?

LawBoy2018

Snotty wrote: »

If you receive a gift of 10k from a parent, although not taxable, should revenue be informed of the gift or is it only after the threshold is met that they need to know?

Only after 90% of the threshold has been used, as far as I know. One would need to file an IT38.

Potential-Monke

Maybe someone can explain why. I never understood CGT or this gift tax and why people have to pay it. Is it not taxing someone on money they were already taxed on at some point? Like, for example, my mother works all her life and through earnings (on which she paid tax) she saves up 200k and the house is worth 200k. If I was an only child, and I inherited the house with no mortgage as it was paid off years ago (in this example, we'll say the father has already passed) and also inherited the 200k, I'd have to pay tax on 65k because.... government greed?

Just baffles me that you can be taxed on something (property or inheritance) that there was most likely already tax paid on.

Victor

Potential-Monke wrote: »

If I was an only child, and I inherited the house with no mortgage as it was paid off years ago (in this example, we'll say the father has already passed) and also inherited the 200k, I'd have to pay tax on 65k because....

Up to this point **you** never paid tax on this income.

Potential-Monke wrote: »

government greed?

The government doesn't get the money, the state does. And 30% of €65,000 is only €18,500. It would mean you would get €400,000 and only have to pay 4.6% tac.

Peregrinus

Potential-Monke wrote: »

Maybe someone can explain why. I never understood CGT or this gift tax and why people have to pay it. Is it not taxing someone on money they were already taxed on at some point? Like, for example, my mother works all her life and through earnings (on which she paid tax) she saves up 200k and the house is worth 200k. If I was an only child, and I inherited the house with no mortgage as it was paid off years ago (in this example, we'll say the father has already passed) and also inherited the 200k, I'd have to pay tax on 65k because.... government greed?

Just baffles me that you can be taxed on something (property or inheritance) that there was most likely already tax paid on.

Every shilling you spend, e.g, in a shop or a pub typically comes out of income that you have already paid tax on, but the shopkeeper/publican will get short shrift if he argues that, therefore, it should be disregarded in calculating the taxable income of his business.

As Victor points out, there is no double taxation in the example you give. Your mother pays tax on her earnings once, and not again. You pay tax on your inheritance once, and not again. Neither of you is taxed twice.

CharlieHaghy

Did ye ever hear of cash?

Dunfyy

Hand him cash
Nod nod wink wink

Government buildings

If you gave someone €5000 cash from your account would the tax man want to know where it went?

Also, can the €3,000 limit be given only within a calendar year? Or can 6k be given in any 2 successive days to cover 2 years?

Peregrinus

Government buildings wrote: »

If you gave someone €5000 cash from your account would the tax man want to know where it went?

He might, but only if he was looking into your affairs in more than the usual level of detail detail.

Note that if you give someone €5000 the liablity to pay gift tax is not yours; it's his. He has an obligation to make a return of the gift whether or not the tax man asks him about it. The tax man might find out about the transaction either from an examination of your account or from an examination of his but, either way, it's him that will have the tax bill, plus interest and penalties.

Government buildings wrote: »

Also, can the €3,000 limit be given only within a calendar year? Or can 6k be given in any 2 successive days to cover 2 years?

It's per calendar year. You can give €3,000 to someone on each of two successive days without giving rise to a gift tax liablity only if those two days are 31 December and 1 January. Otherwise you have given €6,000 to someone within the calendar year, and the small gifts exemption limit has been exceeded.

Pcgamer

Snotty wrote: »

If you receive a gift of 10k from a parent, although not taxable, should revenue be informed of the gift or is it only after the threshold is met that they need to know?

Lads seriously, your reading too much into it big time.

Government buildings

Peregrinus wrote: »

He might, but only if he was looking into your affairs in more than the usual level of detail detail.

Note that if you give someone €5000 the liablity to pay gift tax is not yours; it's his. He has an obligation to make a return of the gift whether or not the tax man asks him about it. The tax man might find out about the transaction either from an examination of your account or from an examination of his but, either way, it's him that will have the tax bill, plus interest and penalties.


It's per calendar year. You can give €3,000 to someone on each of two successive days without giving rise to a gift tax liablity only if those two days are 31 December and 1 January. Otherwise you have given €6,000 to someone within the calendar year, and the small gifts exemption limit has been exceeded.

Thanks Peregrinus. Could you give a general answer to this question. If I leave my niece a rented property during my lifetime, I know I have to pay capital gains on it but does she also have to pay gift tax on it?

Peregrinus

Government buildings wrote: »

Thanks Peregrinus. Could you give a general answer to this question. If I leave my niece a rented property during my lifetime, I know I have to pay capital gains on it but does she also have to pay gift tax on it?

It's complicated.

If you dispose of your investment property by gifting it to your neice, you'll be treated as having disposed of it for its market value. And if its market value at the time of disposal is greater than what you paid for it, then you've made a gain and that will attract CGT.

Your neice has received a gift, and this attracts gift tax in the usual way, based again on the market value of the property.

However your neice should be able to claim credit for the CGT that you have paid to reduce or (if you have paid enough CGT) eliminate her liablity to gift tax. But if she sells the property on within two years, the credit may be clawed back and she'll have to pay the gift tax at that point (as well as paying CGT on any gain she] has made).