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Tax on gifts to adult children

  • 24-02-2023 7:23pm
    #1
    Registered Users, Registered Users 2 Posts: 987 ✭✭✭


    I'm sure this has been discussed before but I can't find it now and I just need clarification. I believe I can gift €3000 to each child tax free per year. I've been told it has to be lodged into a bank account, and what I want to know is, does it have to be a special bank account that has to be opened or is their savings account ok? I just want to do the right thing and not make a mess for them later on. Thanks in advance.



Comments

  • Registered Users, Registered Users 2 Posts: 11,522 ✭✭✭✭Jim_Hodge


    You can give to to them any way you wish.



  • Registered Users, Registered Users 2 Posts: 987 ✭✭✭Jellybaby_1


    Really? I was told it had to be lodged. Thanks for replying.



  • Registered Users, Registered Users 2 Posts: 6,053 ✭✭✭Princess Calla


    It obviously makes it more transparent if it's lodged or done by electronic funds transfer.



  • Registered Users, Registered Users 2 Posts: 987 ✭✭✭Jellybaby_1


    Indeed. I just wondered if perhaps the children had to open a special kind of account especially for gifting. If not, then I'll just use their own accounts for lodging. Many thanks.



  • Registered Users, Registered Users 2 Posts: 3,095 ✭✭✭Sarn


    It’s the small gift exemption that you’re thinking of.

    You don’t need to be related to gift €3k to a person tax free per year.



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  • Registered Users, Registered Users 2 Posts: 987 ✭✭✭Jellybaby_1




  • Registered Users, Registered Users 2 Posts: 668 ✭✭✭Rockfish


    I received a gift of €,7500 from a family member, can i just lodge this to my account with no questions asked etc? And would i be liable for CAT?



  • Registered Users, Registered Users 2 Posts: 1,786 ✭✭✭DownByTheGarden


    Think of 4500 of it as a loan that you will be paying them back over a few years in some form or other.



  • Registered Users, Registered Users 2 Posts: 668 ✭✭✭Rockfish


    I know what your'e saying but doesnt really help me



  • Registered Users, Registered Users 2 Posts: 13,898 ✭✭✭✭Geuze



    Have a read about CAT:


    What you do with the 7,500 is not relevant, you can spend it, save it, that is not relevant.

    What is relevant is the relationship between you and the donor, and the lifetime gifts received by you.



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  • Registered Users, Registered Users 2 Posts: 13,898 ✭✭✭✭Geuze


    CAT groups and group thresholds

    Note

    Gifts and inheritances taken by a Spouse or Civil Partner are exempt from CAT.

    If you are a widow, widower or a surviving civil partner, Surviving Spouse or Surviving Civil Partner Relief may apply to you. This relief may affect which threshold applies to you.

    You do not pay tax on a gift or inheritance if its taxable value is below a particular threshold. The threshold you use depends on your relationship to the disponer. You must pay tax on any remaining value above that threshold.

    There are three groups with different thresholds that apply from 7 December 2011.

    Note

    A ‘child’ includes a son, daughter, stepchild and certain foster children.

    Group A

    The Group A threshold applies where you, the beneficiary, on the date of the gift or inheritance are:

    • a child of the:
      • disponer
      • disponer’s spouse or civil partner (commonly known as a stepchild)
    • a minor child, under 18 years of age, of a deceased child of the:
      • disponer (commonly known as a grandchild)
      • disponer’s spouse or civil partner (commonly known as a step-grandchild)
    • a parent of the disponer and you take an absolute interest (that is, not a limited interest) of an inheritance on the death of your child.
    • a minor child of the spouse or civil partner of a deceased child of the:
      • disponer
      • disponer’s spouse or civil partner

    Note

    An Estate may consist of several different properties. It is not necessary for a parent to inherit the whole of an Estate in order to take an absolute interest. A person inherits an absolute interest in a property if the deceased has not attached any conditions or restrictions in relation to that property.

     

    • Example 1
    • Michael dies and, in his will, leaves:
    • - a house to his mother, Catherine
    • - a bank account to his father, Adam
    • - shares to his sister, Susan.
    • As both parents are receiving an absolute inheritance, with no conditions attached, Group A threshold applies to Catherine’s and Adam’s benefit from Michael.
    • Example 2

     Group B

    The Group B threshold applies where you, the beneficiary, on the date of the gift or inheritance are:

    • a parent of the disponer, where you take a gift or a limited interest
    • a brother or sister of the disponer
    • a child of a brother or sister of the disponer (Favourite Nephew or Niece Relief may apply)
    • a child of the civil partner of a brother or sister of the disponer
    • a grandparent of the disponer
    • a grandchild of the disponer
    • a lineal ancestor or a lineal descendant of the disponer.

    Group C

    The Group C threshold applies where you, the beneficiary, on the date of the gift or inheritance have a relationship to the disponer not already covered in Groups A or B.



  • Registered Users, Registered Users 2 Posts: 13,898 ✭✭✭✭Geuze


    Here are the CAT thresholds:





  • Registered Users, Registered Users 2 Posts: 668 ✭✭✭Rockfish


    Thanks geuze, ya im an adult child of the disposer so no issue at all with tax as €75k is well below the threshold, im surpised the threshold is so high tbh



  • Registered Users, Registered Users 2 Posts: 13,898 ✭✭✭✭Geuze


    A child can receive up to 335k free of CAT within category A, this is a lifetime allowance.



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