Gift for mortgage

thestar

Hi,

Can a sister give you a gift for a mortgage or does it have to be a parent?

Also, does that gift have to be in your account before you apply for the mortgage?

Thanks

Atlantic Dawn

Yes but the amount tax free is much smaller, €32,500...
https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-thresholds-rates-and-aggregation-rules/cat-groups-and-group-thresholds.aspx

thestar

Thanks for your reply. Would you know would there be much of a banking charge for transferring say 30k from one account to another?

Also is each lending institution different in the sense of the letter they expect or is there a generic gift letter so to speak?

chancer007

I believe, if a large amount of money arrives into your account, bank might call and query it, for revenue purposes

dennyk

Anyone can gift you funds, but the bank will be more suspicious that the "gift" might actually be an informal loan if the gifter isn't closely related to you; it's not exactly typical for distant cousins or unrelated friends to just freely gift each other five-figure sums for the hell of it. A sibling probably won't raise too many eyebrows, though.

The money would actually need to be in your account before you apply for the mortgage, as the lender will want to see proof that you actually have the necessary funds. The gift letter is about verifying the source of the funds; it won't be taken as a promise of future funds, as a promise to give someone a gift in the future carries no legal weight and is therefore meaningless from the lender's perspective.

There's usually no fee for a SEPA transfer between two Euro bank accounts at most Irish banks, though you'll need to check with your banks to be certain. The sender might pay a small transaction fee (usually a few cents) for each transfer with some accounts. There may be daily transfer limits on the sender's account that would require the transfer to be broken into multiple transfers over multiple days, though. (If you're talking about non-Euro funds or worse, funds from a non-EU account, there will be significantly higher fees, though even then such fees will likely be a drop in the ocean compared to a gift of the funds needed for a deposit on a house...)

Most lenders will have their own gift letter template, so it's best to use theirs if possible; they might be very picky about such things and refuse to accept a generic template.

Trish56

Yes your sister will be acceptable to give you a gift by lenders. When applying for a mortgage you will need to explain where the balance of the deposit is coming from so you will need to complete a gift letter.

You do not have to have these gift funds lodged when submitting your mortgage application to get an 'Approval in Principle' the signed gift letter will suffice. All lenders are different in how they treat a gift some just accept the gift letter others want to see the funds lodged before cheque issue.

WhiteWalls

Thanks for the replies but if I was to have the sum in my account 6 months before applying then there would be no need for this letter?

Trish56

It's possible that the lender could ask for more than 6 months current and savings account statements. Your Solicitor will also need to know if you received a gift.

WhiteWalls

Trish56 wrote: »

It's possible that the lender could ask for more than 6 months current and savings account statements. Your Solicitor will also need to know if you received a gift.

Why is this necessary to tell my solicitor if you don't mind me asking?I personally have the deposit, this is extra.

Milena009

WhiteWalls wrote: »

Why is this necessary to tell my solicitor if you don't mind me asking?I personally have the deposit, this is extra.

I think it's so they declare it with revenue?
Ive heard that you/ whoever gifts you money has to sign something with solicitor which is separate to gift certificate but I am yet to get to that point myself

Trish56

You can receive a 3k gift per annum tax free and you can receive a gift from a sister of up to €32,500 tax free anything over this you pay gift tax on.

WhiteWalls wrote: »

Why is this necessary to tell my solicitor if you don't mind me asking?I personally have the deposit, this is extra.

ax530

you will need to declare the gift with revenue even when no tax is due on it as will be within 80% of total tax free amount. Revenue need to know this as any future gifts you get will then be taxed. The 32.500 is a lifetime gift sum in that category.

mickdw

ax530 wrote: »

you will need to declare the gift with revenue even when no tax is due on it as will be within 80% of total tax free amount. Revenue need to know this as any future gifts you get will then be taxed. The 32.500 is a lifetime gift sum in that category.

So many people miss this and its very important to make that tax return.

Trish56

Do you have to declare the 3k tax free per annum to Revenue??

ax530

I don't think so only if it within 80% of threshold or some number like that