Bank of mum and dad

Daddy Ireland

Hearing alot about parents helping out kids with deposits for houses. What is not clear is if parents are gifting them money or loaning them money. I would have thought the majority were loans at little or no interest. What do people think. Is it more likely to be a loan rather than a gift ?

heretothere

Really depends on the parents! If you are using it for a deposit though you will need to get them to sign a legal document saying the money is a gift, as you can't have a loan as part of your deposit. Also if you are getting a "gift" which isn't really a gift remember it will count towards your tax free allowance on inheritance.

Not something I have to worry about, won't be lent/ gifted or inherit anything!

Furze99

Gifting I would think, apparently you can theoretically gift each child up to €330,000 I heard. But if/ when any inheritance comes into play, these house deposit gifts will be included in same.

I dunno, big change from our day - we didn't receive nor wouldn't have expected any kind of help like this for house purchase. And relatively speaking, our wages were proportionately lower than now, as was rent. We just saved liked everyone else and got somewhere we could afford. Downside of latter is that not close to other family members.

homer911

For parents, definitely gifting.

I lent money to a niece for deposit and it had to be legally treated as a gift. Below the threshold for Group B so no tax payable and thankfully they are paying it back each month, but it will take a while..

Its not like they are going to inherit anything from me or another aunt/uncle so not an issue

seamus

On paper, they're virtually all gifts. The bank typically want a declaration from the parent that the money is not repayable, in order to satisfy their credit requirements. Thus, people do that even if they money is actually repayable.

From a taxation point of view, even if the money is repayable, the benefit the person has received can be treated as a gift.

So if a person is given a €50k loan to buy a €200k property, at zero interest, then in theory the interest that they don't have to pay can be considered a taxable gift. That is, if you repay the €50k over ten years at zero interest, and you would typically have had to pay €7k interest if you'd gotten that loan from a bank, then that €7k can be considered taxable.

Likewise if the arrangement is that you pay off the loan after you've sold the property. Buy at €200k, sell at €300k, repay €50k. That €50k has actually become €75k, meaning you've gained/been gifted €25k. Which in theory may be taxable.

But that's all theoretical, very unlikely to actually become an issue unless the amounts are much much larger or the individuals otherwise come to Revenue's attention.

Viscount Aggro

I know of people who got the 335 upfront for buying property.